Malaysia

Production In November Expanded By 4.4% YoY, after posting a 1.8% increase previously. This is due to a rebound in the mining sector as well as continuous annual growth in manufacturing. Compared to the previous month however, production declined by 1.4% MoM, a historical norm for the month of November as factories wind down production, but the 3-month moving average (3mma), used to smoothen out seasonal factors, saw production gaining 2.3% YoY (October: 1.8%). On a year-to-date basis, industrial production posted a 2.6% gain compared to 4.5% in the same period in 2012. (Please refer to Economic Viewpoint for further comments)

BT: Moody’s to review Malaysia next 12 to 18 months. Moody’s vice-president and senior analyst Christian de Guzman said that its next rating review on Malaysia is between 12 and 18 months away. Moody’s will view it negatively if the government defers the implementation of the Goods and Services Tax. (Business Times)

Asia

China Inflation Rate Hits 7-Month Low, Eases Tightening Fears. China's annual consumer inflation slowed more sharply than expected to a seven-month low of 2.5% in December, easing market fears of tighter monetary policy rates although the central bank is tapping the brakes on bank liquidity. Rising money market rates and bond yields indicate the People's Bank of China (PBoC) is tightening liquidity conditions, to reduce debt levels and contain credit growth, but there is little sign of a sharp turnaround in its policy stance. The central bank has pledged to continue to maintain prudent monetary policy in 2014 and keep reasonable money and credit growth to support the real economy. (Reuters)

China Auto Sales Up Nearly 14% In 2013. Auto sales in China, the world's biggest car market, surged 13.9% to 21.98 million vehicles last year, an industry group said Thursday, with the growth rate outpacing 2012 despite economic weakness. Sales of passenger vehicles alone jumped 15.7% year-on-year to 17.93 million units, the China Association of Automobile Manufacturers (CAAM) said in a statement. China's huge auto market is critically important to foreign companies, which have looked to its vast potential to take up the slack from flagging sales in Europe. In December, sales of vehicles – both passenger and commercial – rose 17.9% year-on-year to 2.13 million units, it said. (AFP)

Bank Of Korea Holds Rate Even As Yen Clouds Export Outlook. The Bank of Korea kept its benchmark interest rate unchanged for an eighth straight month, citing strength in Asia’s fourth-biggest economy even as a weak yen threatens some industries competing with Japanese companies. Governor Kim Choong Soo and his board held the seven-day repurchase rate at 2.5 percent after a cut in May, the central bank said in a statement in Seoul today. Eighteen of 19 economists surveyed by Bloomberg News predicted the outcome, with Goldman Sachs Group Inc. foreseeing a cut. (Bloomberg)

Indonesia Holds Key Rate As Price Pressures-To-Imports Ease. Indonesia kept interest rates unchanged for a second straight meeting, extending a pause in monetary tightening as inflation held steady and imports fell. The central bank maintained the reference rate at 7.5 percent, it said in Jakarta today, a decision predicted by 15 of 18 economists surveyed by Bloomberg News. The rest expected a 25 basis-point increase. It kept the deposit facility rate at 5.75 percent. (Bloomberg)

USA

New US Fed Head Hopeful For 3% GDP Growth In 2014. Janet Yellen, who is set to take over as head of the Federal Reserve next month, is "hopeful" that U.S. economic growth will accelerate in 2014 to 3 percent or more and persistently low inflation will move up toward the central bank's target, according to a Time magazine interview released Thursday. "I think we'll see stronger growth this year," Yellen said in the interview, released online ahead of the Time edition's January 20 publishing date. "Most of my colleagues on the Fed's policymaking committee and I are hopeful that the first digit (of GDP growth) could be 3 rather than 2." U.S. gross domestic product growth has averaged 2.6 percent through the first three quarters of 2013, but appears to have gathered momentum in the second half the year. Third-quarter GDP growth was recently revised up to 4.1 percent, though it is not expected to have sustained that pace for the fourth quarter. (Reuters)

Decrease In Claims Shows U.S. Labor Market Mending. Claims for jobless benefits dropped last week to the lowest level in a month as fewer temporary workers were dismissed following the holidays, showing the U.S. labor market is on the mend. The number of applications for unemployment insurance payments declined by 15,000 to 330,000 in the period ended Jan. 4, the fewest since the end of November, the Labor Department reported today in Washington. Another report today showed consumers grew a bit more optimistic at the start of 2014. (Bloomberg)

Europe

European Central Bank Keeps Rates At Record 0.25% Low. The European Central Bank (ECB) has kept its benchmark interest rate at a record low of 0.25%. ECB said president Mario Draghi said rates would "remain at present or lower levels for an extended period of time". There had been speculation that the bank might act to bolster fragile growth in the 18-nation euro bloc. With eurozone inflation falling below 1%, there is also concern about deflation as consumers delay purchases in the hope of prices falling further. The eurozone economy grew only 0.1% in the third quarter, while inflation, at only 0.8%, remains below the ECB's goal of about 2%.(BBC)

Bank Of England Gives No Further Guidance On Rates. The Bank of England has given no further guidance on when it might raise interest rates, after deciding to keep them on hold at 0.5% once again. There had been speculation that the Bank might have to refine its threshold for increasing rates. Back in August, governor Mark Carney said unemployment would have to decline to 7% before an interest rate rise would be considered. An improved economy has meant that could happen sooner than expected. The Bank also made no further addition to its £375bn bond-buying scheme known as quantitative easing (QE). Base rates have now been at 0.5% since March 2009. (BBC)

UK: Gap Between Exports And Imports Narrows In November. The gap between imports and exports of goods shrank in November, the Office for National Statistics (ONS) has said. The ONS said the goods trade deficit narrowed to £9.4bn, compared with £9.7bn in October. It added that exports were boosted by higher sales to recovering economies in the European Union. Including services, in which the UK traditionally has a surplus, the overall trade deficit narrowed from £3.5bn to £3.2bn. (BBC)

German Industrial Output Rises First Time In Three Months. German industrial production rose for the first time in three months in November, adding to signs that Europe’s largest economy is gathering pace. Output, adjusted for seasonal swings, increased 1.9 percent from October, when it fell 1.2 percent, the Economy Ministry in Berlin said today. Economists predicted a gain of 1.5 percent, according to the median of 32 estimates in a Bloomberg News survey. Production climbed 3.5 percent from a year earlier when adjusted for working days. (Bloomberg)

Currencies

Dollar Down Vs. Euro As Focus Turns To Jobs Report. The dollar was slightly weaker against the euro Thursday as investors digested remarks from European Central Bank President Mario Draghi and looked ahead to key U.S. employment data due Friday. In recent trade, the euro inched up to $1.3596 from $1.3575 late Wednesday. The ICE dollar index , which measures the greenback against six other currencies, was at 80.978 versus 81.069 on Wednesday. The pound was slightly stronger against the dollar, trading at $1.6479 from $1.6450 late Wednesday. The dollar traded at ¥104.79 recently versus ¥104.86 late Wednesday. The Australian dollar edged down to 88.90 U.S. cents from 89.02 U.S. cents. In other action, the dollar rose to 1.0858 Canadian dollars from 1.0825 Canadian dollars late Wednesday. (Market Watch)

Commodities

Oil Up Towards $108 On As Caution On Libya Prevails. Oil rose towards $108 a barrel on Thursday, as caution prevailed on prospects for a solution to Libya's oil exports deadlock. Brent crude for February delivery was 69 cents higher at $107.84 per barrel at 1047 GMT, after settling 20 cents lower the day before. U.S. oil was up 43 cents at $92.76. The contract shed $1.34 to end at a six-week low on Wednesday as a large build in crude stockpiles at the contract's delivery point in Cushing, Oklahoma, weighed on the market. (Reuters)

Gold Rises Ahead Of US Jobs Data, Breaks Two-Day Drop. Gold prices rose on Thursday after two days of losses as traders added positions ahead of Friday's key U.S. nonfarm payrolls report, which will be closely watched for clues on whether the Federal Reserve will keep trimming its bond-buying stimulus. Spot gold was up 0.2 percent at $1,227.86 an ounce by 3:22 p.m. EST (2022 GMT). Among other precious metals, silver was up 0.3percent to $19.55 an ounce. Platinum edged up 25 cents at $1,413.75 and palladium eased 25 cents at $733.25. (Reuters)