Malaysia

The Inflation Rate For The Month Of May Increased By 1.8% YoY, from 1.7% previously, slightly higher than market expectations of 1.7% but spot on with our own estimates. The increase in the overall price index was by and large the result of a rise in food & nonalcoholic beverage and the housing, water, electricity & other fuels index. On a monthly comparison, the inflation rate increased by 0.3% and rose by an average of 1.6% for the first five months of the year, compared to 2.1% in the same period a year ago. (Please refer to Economic Viewpoint for further comments) 

Asia 

Kuroda Says BoJ Can Ease More If Conditions Change Significantly. Bank of Japan Governor Haruhiko Kuroda said that the central bank could add to its unprecedented monetary easing announced two months ago should economic conditions change significantly. The April 4 package could be expanded or reduced as needed, Kuroda told lawmakers today. The BOJ said in its latest statement that it will make policy adjustments “as appropriate.” In April, Kuroda said that policy makers had done everything “necessary” and “possible” to counter deflation and spur growth. (Bloomberg)

Japanese Exports Rise By Most Since 2010. Japanese exports rose in May at the fastest annual rate since 2010 as the yen weakened, providing a boost to Prime Minister Shinzo Abe's plan to revive the economy. Shipments shot up 10.1% from the previous year, data showed, to earn 5.8tn yen ($60.5bn). The yen has weakened significantly since last year, despite recent gains, helping exporters. Shipments picked up in key markets, with exports to the US rising 16.3% from a year earlier. Shipments to China increased by 8.3%. (BBC)

Chinese Govt Says Financial System Must Support Economy. China’s government said the financial system must better support the economy, after a surge in credit failed to ignite growth and interbank borrowing costs jumped to a two-year high. Authorities will boost credit support for industries the government has defined as strategic and those that are labor-intensive, the State Council, or Cabinet, said in Beijing yesterday after a meeting led by Premier Li Keqiang. The nation must more firmly guard against financial risks, according to a statement on the central government’s website. (Bloomberg)

North America

Bernanke Says Fed On Course To End Asset Buying In 2014. Federal Reserve Chairman Ben S. Bernanke said the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009.The Federal Open Market Committee today left the monthly pace of bond purchases unchanged at $85 billion, while saying that “downside risks to the outlook for the economy and the labor market” have diminished. Policy makers raised their growth forecasts for next year to a range of 3% to 3.5% and reduced their outlook for unemployment to as low as 6.5%. (Bloomberg)

Canada April Wholesale Sales Rise 0.2% For Fourth Straight Gain. Canadian wholesale sales rose for a fourth month in April, the longest streak of gains in a year, led by computer and communications supplies. Receipts rose 0.2% to C$49.0 billion ($48.0 billion), Statistics Canada said today in Ottawa, after a revised 0.1% gain in March. Economists surveyed by Bloomberg Newsforecast sales would climb 0.3% the median of 15 responses, from an initially reported 0.3% gain in March. (Bloomberg)

Poloz Urges ‘Stability And Patience’ For Canada Rebound. Bank of Canada Governor Stephen Poloz said the nation will need a rebound in business investment to drive growth in coming years, a process that will require “stability and patience.”Stronger U.S. demand for Canada’s exports is critical for confidence to improve and spending to increase, Poloz said in his first public speech since taking office June 3. Companies already have the capacity to take on more debt and increase investments, he said. While the Bank of Canada has been alone in the Group of Seven in signaling that its next move may be to raise interest rates, economists are anticipating Poloz won’t tighten policy until the end of next year at the earliest, in part to avoid a strengthening of the Canadian dollar that could undermine business confidence and exports. (Bloomberg)

Europe

IMF: Spain's 'Hard Won' Solvency Needs Protection. "Proactive vigilance" is needed to safeguard the "hard won" solvency of Spain's banking system, and Europe needs to do more to ease Spain's financial woes, the International Monetary Fund has warned. In the fund's concluding statement from its most recent visit to Spain, the IMF said decisive action had been taken to clean up the country's banks, but it has so far not been enough to reverse the "financial fragmentation" the country is facing. The banking crisis in Spain has wiped out billions of euros of investors' money, with shares in nationalized lender Bankia tanking some 93 % in the last year. The European Union (EU) approved 100 billion euros in aid for Spain's banking system earlier this month. "Losses need to be promptly recognized and distressed assets sold to avoid tying up resources that could flow to more productive uses," the IMF said. (CNBC)

EU Parliament Chief Negotiator Backs 7-Year Budget Cut For Bloc. The European Parliament’s chief budget negotiator accepted a lower seven-year spending ceiling demanded by government heads in return for a mid-term review, setting the stage for a push to win the full assembly’s support. Alain Lamassoure,  a French member of the European Union legislature,  accepted a proposal by national leaders in February to fix the EU’s budget for 2014-2020 at 960 billion euros ($1.3 trillion). The sum, down from an original proposal of 1.047 trillion euros and less than the  994 billion euros committed in the current budget cycle, would mark the first shrinking of the EU’s “Multiannual Financial Framework.” (Bloomberg)

Currencies

Dollar Surges As Bond Buys Could Slow This Year. The U.S. dollar surged on Wednesday after Federal  Reserve Chairman Ben Bernanke said the central bank could slow the pace of its bond-buying program later this year if its economic forecasts are accurate. The ICE dollar index, which tracks the greenback’s performance against six rivals, rose to 81.301 from 80.640 late Tuesday. The U.S. dollar rose more than 1% against the Japanese yen. The greenback exchanged hands at ¥96.36, up from ¥95.30 late Tuesday in North American trade. The euro fell to $1.3294 from $1.3398 late Tuesday after the Fed statement. The British pound fell to $1.5482 from $1.5646. The Australian dollar fell to 93.01 U.S. cents, lower than 95.00 U.S. cents on Tuesday. (Market Watch)

Commodities

Brent Holds Above $106, All Eyes On Fed. Brent crude futures held above $106 a barrel on Wednesday as investors looked to a Federal Reserve meeting for clues on the outlook for a U.S. stimulus programme that has underpinned commodity prices.  Brent futures for August delivery had edged down 1 cent to $106.01 a barrel by 0310 GMT. U.S. crude for July delivery fell 6 cents to $90.38. (Reuters)

Gold Hits 1-Month Low On Bernanke's Reduced Stimulus Talk. Gold fell to a one-month low on Wednesday after the U.S. Federal Reserve chairman said he expects to slow the pace of the central bank's bond purchases later this year and bring them to a halt around mid-2014. Spot gold was down 1.3% to $1,349.86 an ounce by 3:49 p.m. EDT (1949 GMT), having hit $1,348.99, its lowest price since May 20. Among other precious metals, silver was down 1.6% at $21.30 an ounce. Platinum dropped 1.7% to $1,415.49 an ounce and palladium fell 2.2% to $692.22 an ounce.  (Reuters)