Malaysia

BNM Has Decided To Keep The OPR At 3.00% yet again. Although it has a more positive outlook on the economy the uncertainty in the global economy, especially on China and Europe, remains. Rising inflation will not be enough to justify a rate hike as cost push factors dominates. Domestically, the plight of those in the lower income as cost of living increases may also be taken into consideration. With Goods and Services Tax (GST) to be implemented in less than a year, the likelihood for BNM to raise interest rates even next year is relatively low. (Please refer to Economic Viewpoint for further comments)

Approved Investment In Manufacturing Up 52.7%: Miti. Malaysia has attracted approved investments of RM17.1bil in the manufacturing sector for the first quarter this year, up 52.7% from RM11.2bil in the corresponding period of 2013, according to the Ministry of International Trade and Industry (Miti). Datuk Seri Mustapa Mohamed, Minister of International Trade and Industry, said this achievement reflected the country's competitiveness as a location of choice for high value added manufacturing activities in the region. He said manufacturing projects approved during the period were expected to generate about 18,677 job opportunities with a major proportion of employment being in highly skilled occupations.(Bernama)

Asia

Indonesia Holds Key Rate As Wider Current-Account Gap Seen. Indonesia’s central bank held its key interest rate for a sixth straight meeting and said it will keep a tight monetary policy stance, seeking to contain a widening current-account gap. Bank Indonesia Governor Agus Martowardojo and his board maintained the reference rate at 7.5 %, the central bank said in Jakarta today, a decision predicted by all 21 economists surveyed by Bloomberg News. It also kept the deposit facility rate unchanged at 5.75 %. (Bloomberg)

Philippines Raises Reserve Ratio, Keeps Key Rate Unchanged. The Philippine central bank ordered lenders to set aside more money as reserves a second time this year to curb liquidity and price pressure, while holding the benchmark rate for a 12th meeting. Bangko Sentral ng Pilipinas raised the reserve requirement ratio for universal and commercial banks by one %age point to 20 % effective May 30, it said in Manila today, as predicted by eight of nine economists in a Bloomberg News survey. It kept the rate it pays lenders for overnight deposits at a record-low 3.5 %, as forecast by 19 of 21 economists. (Bloomberg)

Philippines Wins S&P Upgrade As Aquino’s Changes Seen Enduring. The Philippines won a credit rating upgrade from Standard & Poor’s a year after it was raised to investment grade, aided by President Benigno Aquino’s efforts to improve the economy and government. The Southeast Asian nation’s long-term sovereign credit rating was raised one level to BBB from BBB-, with a stable outlook, S&P said in a statement today. “We raised the ratings because we now believe the ongoing reforms to address shortcomings in structural, administrative, institutional, and governance areas will endure beyond the current administration,” S&P said. (Bloomberg)

China's Exports And Imports Rebound. China's exports and imports rebounded in April, helping allay some fears about a slowdown in its economy. Exports rose 0.9% from a year earlier, after falling for two straight months. Shipments had dropped 6.6% in March and 18.1% in February. Imports grew 0.8% from a year ago, reversing the 11.3% decline in March. The data come as China is looking to move its economy away from an export and investment-led growth model to one driven by domestic consumption. (BBC)

USA

Jobless Claims In U.S. Dropped More Than Forecast Last Week. Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the labor market continues to gain traction. Jobless claims fell 26,000 to 319,000 in the week ended May 3 from a revised 345,000 in the prior period, the Labor Department reported today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a decrease to 325,000. (Bloomberg)

Europe

ECB Holds Rates But Draghi Hints At Policy Change. European Central Bank president Mario Draghi has hinted the bank's policymakers may act soon to reverse the eurozone's prolonged low inflation. The ECB chief said on Thursday that the monetary authority was "not resigned" to low inflation, which at 0.7% is well below the 2% target. The comments followed that ECB's decision to keep its benchmark interest rate at a record low of 0.25%. Low inflation makes it harder for people and businesses to reduce debt. Persistently low inflation across the eurozone has prompted growing calls for the ECB to cut rates to head off deflation risks. (BBC)

Bank Of England Holds UK Interest Rates At 0.5%. UK interest rates have been held at the record low of 0.5% for another month by the Bank of England. The Bank also kept the size of its bond-buying economic stimulus programme unchanged at £375bn. The news is in line with analysts' expectations, despite recent evidence that the UK economic recovery is strengthening. Worries about rising house prices in parts of the UK have intensified the debate over when rates might increase. (BBC)

German Industrial Output Unexpectedly Falls. German industrial output unexpectedly fell for the first time in five months in a sign that expansion in Europe’s largest economy is slowing. Production, adjusted for seasonal swings, declined 0.5 % from February, when it gained a revised 0.6 %, the Federal Statistics Office in Wiesbaden said today. Economists predicted an increase of 0.2 %, according to the median of 36 estimates in a Bloomberg News survey. Production rose 3 % in March from the previous year when adjusted for working days. (Bloomberg)

Danish Government Unveils Plan To Help Economy Exit Crisis. Denmark’s government unveiled its second growth package in two years designed to drag Scandinavia’s weakest economy out of its crisis. The plan will raise Denmark’s structural output by 6 billion kroner ($1.1 billion) and cut costs for companies by 4 billion kroner in 2020 through 89 measures to improve the business climate and boost employment, the Copenhagen-based Finance Ministry said in a statement. (Bloomberg)

Currencies

Euro Drops; Draghi Is ‘Comfortable’ Easing In June. The euro dropped against the U.S. dollar Thursday after European Central Bank President Mario Draghi said he would be “comfortable” easing monetary policy further in June, if needed. The euro fell to $1.3851 from $1.3910 late Wednesday, giving up earlier gains. The ICE dollar index, which measures the dollar’s strength against six other currencies, rose to 79.433 from 79.238 late Wednesday. Elsewhere in the market, the British pound fell to $1.6932 from $1.6955 late Wednesday. The dollar fell to 101.57 Japanese yen from ¥101.90 late Wednesday. The Australian dollar rose to 93.73 U.S. cents from 93.28 U.S. cents. (Market Watch)

Commodities

U.S. Crude Falls On Technical Trade, Eyes Ukraine Conflict. U.S. crude oil prices fell on Thursday after hitting resistance at a key technical level, and Brent also fell as traders awaited developments in Ukraine. Brent futures, settled down 9 cents at $108.04 a barrel. U.S. crude settled 51 cents lower at $100.26 per barrel. (Reuters)

Gold Edges Up As Investors Digest Yellen Comments. Gold edged up on Thursday after the previous day's more than 1% drop as investors digested comments by Federal Reserve Chair Yellen that the central bank is in no rush to reduce the size of its balance sheet. Spot gold inched up 0.1 % to $1,290.11 an ounce by 2:55 p.m. (1855 GMT). Among other precious metals, silver was down 0.8% at $19.15. Platinum gained 0.5 % to $1,436 an ounce, while palladium rose 0.7 % to $801.25 an ounce. (Reuters)