Malaysia

Inflation Inched Slightly Lower In July, Posting A 3.2% YoY Growth after seeing a 3.3% rise in the previous month. This is slightly below market expectations for a 3.3% increase. The moderating rate is due to a slight tapering of food prices, which we believe had already peaked in the previous month. The core inflation (minus food & beverages) remained at 3.2%. For the period of January to July, the CPI averaged at 3.3% compared to 1.7% seen in the same period in 2013. On a monthly comparison, inflation increased by 0.1% MoM. (Please refer to Economic Viewpoint for further comments)

China Investments In Malaysia To Top US$1bil. Approved investments from China into Malaysia are expected to exceed US$1bil (RM3.15bil) this year from more than US$900mil (RM2.8bil) last year, said Embassy of the People’s Republic of China to Malaysia economic counsellor Wu Zhengping. “Establishments such as the Qingzhou and Kuantan industrial parks create a new two-way investment model between our two countries,” Wu said. He said there were other investments at the exploration stage including a cement factory as well as a clean energy system, in which electricity is generated from garbage. Speaking at a the “RMB Globalisation – Milestones and Future Prospects’’ conference in Kuala Lumpur, Wu said it was possible to bring the bilateral trade volume between Malaysia and China to US$160bil (RM513bil) by 2017. (The Star)

Asia

Japan Exports Growth Fuels Recovery Hopes. Japanese exports showed a surprise rise in July, reigniting hopes of growth for the world's third largest economy. Exports rose 3.9% when compared to one year ago, helped by higher shipments of cars and electric machinery. It is the first increase in three months. Imports rose 2.3% in the same month, led by rising demand for oil and gas after the Fukushima disaster in 2011 led to a shutdown of nuclear reactors. The government has pinned hopes of growth on an export-led recovery. Japan's trade deficit widened to 964bil yen ($9.4bn) in July, compared to a deficit of 822bn yen in June. (BBC)

USA

Fed Officials Said Job Gains May Bring Faster Rate Increase. Federal Reserve Officials Raised The Possibility They Might Raise Rates Sooner Than Anticipated, As They Neared Agreement on an exit strategy, according to minutes of their July meeting. “Many participants noted that if convergence toward the committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated,” the minutes, released today in Washington, read. Fed Chair Janet Yellen has committed to use monetary policy to strengthen the labor market so long as inflation remains in check. “Many participants” at the meeting still also saw “a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization,” the minutes showed. (Bloomberg)

Europe

France's Hollande Says To Speed Up Reforms, Ease Tax On Poorest. French President Francois Hollande said on Wednesday he would accelerate reforms while at the same time giving tax breaks to poorer households as he tries to win back confidence from voters who do not trust he can lift the country out of stagnation. The most unpopular French president in modern history has come under growing fire from both the opposition and some ruling Socialist party lawmakers over his economic policy after his government abandoned growth and fiscal targets last week. As he prepares for tough negotiations on the 2015 budget both at home and with France's EU partners, Hollande sought in an interview with Le Monde to explain that he would work on both fronts: reform France and help low-income households. (Reuters)

UK Mortgage Lending Nears Six-Year High In July. Mortgage lending rose to £19.1bn in July to reach the highest monthly total since August 2008. The Council of Mortgage Lenders (CML) said the figure was 7% up from June, and 15% higher than July last year. Caroline Offord, a CML analyst, said that mortgage lending remained robust, despite regulatory changes earlier this year to toughen lending criteria. There was a 25% rise in property transactions in the first half of 2014, the CML said. However, Ms Offord said that affordability pressures could start to affect the property market. (BBC)

Currencies

U.S. Dollar Rallies After Fed Minutes Release. The U.S. dollar rallied against key rivals on Wednesday after the Federal Reserve released meeting minutes suggesting the pace of labor-market gains is getting quicker. The dollar bought 103.76 Japanese yen on Wednesday jumping over ¥103 for the first time since April. The euro fell to $1.3264 on Wednesday from $1.3321 late Tuesday, closing firmly below $1.33. The U.S. dollar index , which measures the greenback against key rivals, rose to 82.222 from 81.876 on Tuesday, marking a fresh 11-month high. The British pound changed hands at $1.6598, down from $1.6621. (Market Watch)

Commodities

Brent Holds Near 14-Month Low On Plentiful Supply. Brent crude futures steadied near 14-month lows above $101 a barrel on Wednesday, with ample supplies putting prices at risk of further losses as worries over geopolitical tensions ease. Brent crude for delivery in October was off 8 cents at $101.48 a barrel by 0631 GMT. The contract fell to $101.07 on Tuesday, its lowest since June 26, 2013. U.S. oil climbed 61 cents to $95.09 per barrel, off a session high of $95.44. It fell as much as $2.15 overnight to hit $94.26, its lowest since January. The more-active October contract slipped 7 cents to $92.79. (Reuters)

Gold Falls As Dollar Jumps After Fed Minutes. Gold prices fell on Wednesday as the dollar rallied on economic optimism after the minutes of the Federal Reserve's latest meeting showed the U.S. central bank has seen progress in the U.S. labor market. Spot gold was down 0.4% at $1,290.21 an ounce by 2:42 p.m. EDT (1842 GMT), while U.S. COMEX gold futures for December delivery settled down $1.50 at $1,295.20. Among other precious metals, silver was up 0.2% at $19.46 an ounce, while platinum dropped 0.7% at $1,421.75 an ounce and palladium fell 1.5% to $865.75 an ounce. (Reuters)