Daily FX Update, 07 August 2015

v  US’s initial jobless claims were little changed at 270k up from 267k last week v  Bank of England, Monetary Policy Committee vote by a majority of 8-1 to maintain Bank Rate 0.5% v  German factory goods orders rose a solid 2% m/m in June v  Japan’s leading index climbed to 107.2 in June v  Thailand’s consumer confidence index decreased to 73.4 in July.

·         US – US initial jobless claims were little changed at 270k up from 267k last week. The four-week moving average eased to 268k from 275k. Overall, jobless claims remain at low levels and are consistent with further declines in the unemployment rate and solid payrolls growth.

·         UK – Bank of England, monetary policy committee was more dovish than expected, voting 8-1 to keep rates on hold. Second, the near-term inflation forecast for Q4 2015 was slashed to 0.3% y/y and the 2016 forecast was lowered slightly to 1.5% y/y on the back of lower oil prices and the strength in GBP on a trade weighted basis.

·         UK – Industrial production declined 0.4% m/m in June as oil and gas extraction fell 5.8% m/m. Manufacturing output, however, rose 0.2% m/m, supported by base metals.

·         Euro area – German factory goods orders rose a solid 2% m/m in June. The rise in orders was driven by a 4.8% m/m rise in exports as orders from outside the euro area rose 6.3% m/m. That would suggest that Germany is weathering the downturn in China and bodes well for the manufacturing sector.

·         Currency – The RBA’s SMP will be closely watched this morning, with growth downgrades expected. In New Zealand we expect Fonterra to update their milk price forecasts while elsewhere the focus is very much on the Bank of Japan and US labour market data tonight.

·         Equity – US equity indices softened, dragged down by softer-than-expected media earnings reports.

·         Rate – US Treasury bonds rallied across the curve, with 10-year yields declining around 4 bps, with weaker US equities attributed to poor media earning results.

·         Energy – Crude oil prices were mixed with Brent outperforming WTI. The global crude oil dynamics may change soon as US getting closer to lifting a 40 year ban on exports.

Precious Metal –Gold prices were little changed as traders were cautious towards US employment report. 

INDICATIVE MAJOR CURRENCIES Last Close  8.05 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 3.9125 3.8890 3.9220 3.8870 3.9320 JPY/MYR (100) 3.1400 3.1130 3.1480 3.1100 3.1700 SGD/MYR 2.8280 2.8050 2.8390 2.8000 2.8600 EUR/MYR 4.2744 4.2480 4.2840 4.2300 4.3200 AUD/MYR 2.8741 2.8500 2.8850 2.8400 2.9100 GBP/MYR 6.0769 6.0390 6.0770 6.0100 6.1300 USD/JPY 124.60 124.53 124.94 124.13 125.13 EUR/USD 1.0925 1.0770 1.1080 1.0870 1.0980 AUD/USD 0.7346 0.7190 0.7500 0.7300 0.7400