Daily FX Update, 31 May 2016

Good Morning!

v  Fed’s Bullard says global markets seem well-prepared for summer rate hike v  Euro area economic confidence strengthens to four-month high in May v  German consumer prices increase in May v  Japan retail sales decline for fifth time in six months v  Malaysia’s new issue of 5.5Y MGS registers lowest BTC of 1.420 times year-to-date

OVERNIGHT MARKET UPDATE: ·         US – St Louis Fed President Bullard (voting member): “My sense is that markets are well-prepared for a possible rate increase globally, and that this is not too surprising given our lift-off from December and the policy of the committee which has been to try to normalize rates slowly and gradually over time.” ·         Euro area – The economy bloc’s economic sentiment index improved to four-month-high of 104.7 in May from a revised score of 104.0 in April, driven by markedly more positive assessments of the future general economic situation, future unemployment and savings expectations ·         Euro area – Germany’s preliminary reading of inflation rate showed prices increased 0.1% y/y in May, reversing a similar size decline in the previous month. Meanwhile, the country’s EU harmonised inflation rate is reported to remain unchanged annually for May following a reading of -0.3% in the previous month. ·         Japan – The retail sales declined 0.8% on annual basis in April, following the 1% decline in the previous month that was originally reported as a 1.1% drop. This was also the fifth decline of retail sales in the past six month. ·         Currencies – Markets mostly marked time with both the US and UK out for holidays. EUR/USD posted a modest advance as inflation and confidence data lifted, while USD/JPY held onto gains from yesterday’s Asian session.    ·         Equities – It was a quiet session for equities, given the US and UK public holidays. European equities closed at around one month highs, on volumes less than half the daily average. The Euro Stoxx 50 rose 0.4%, with similarly sized gains in the DAX.  ·         Rates – The increased likelihood of Fed hikes contributed to a 3 bps climb in French and German 10 year yields. ·         Energy – Crude oil prices little changed as investors waited for cues from the OPEC meeting this Thursday, where the issue of oversupply is expected to take the stage. ·         Precious Metals – Gold prices remain under pressure as speculation of a US rate hike in June increases.

INDICATIVE MAJOR CURRENCIES Last Close 8.02 am Snapshot Expected Range for Today Bid Offer Low High USD/MYR 4.1165 4.0930 4.1340 4.0910 4.1360 JPY/MYR 3.7039 3.6930 3.7280 3.6800 3.7500 SGD/MYR 2.9802 2.9630 3.0020 2.9600 3.0100 EUR/MYR 4.5833 4.5650 4.6080 4.5400 4.6300 AUD/MYR 2.9573 2.9410 2.9800 2.9300 3.0000 GBP/MYR 6.0245 5.9990 6.0460 5.9700 6.0800 USD/JPY 111.14 110.62 111.03 110.22 111.22 EUR/USD 1.1134 1.0990 1.1300 1.1090 1.1200 AUD/USD 0.7184 0.7040 0.7350 0.7150 0.7250 Source: Bloomberg, AmBank