Malaysia

Malaysia Gets To Set Up Yuan Clearing House. In a landmark move, Malaysia and China have agreed to set up a yuan clearing bank here to facilitate and reduce the cost of doing business in the country. With this agreement, Malaysia will be the second country after Singapore in the Asean region to establish a yuan-clearing bank with China. Yesterday, Bank Negara inked a memorandum of understanding (MoU) with the People’s Bank of China (PBoC) in Beijing to establish yuan clearing arrangements in Malaysia. Prior to this agreement, a conversion of the ringgit into yuan would need to be first converted into the US dollar and then thereafter to the yuan, also known as renminbi or RMB. With a clearing house in Malaysia, the ringgit can be directly converted to yuan, hence reducing the cost of transaction. Bank Negara said the designation of a yuan clearing bank for Malaysia, the first in emerging economies in Asia outside China, was an important recognition of the country’s role as a key yuan offshore centre. (The Star)

Asia

China October Inflation Hovers Near Five-Year Low, Deflation Risks Seen Growing. China's annual consumer inflation remained near a five-year low in October at 1.6%, further evidence that the world's second-largest economy is cooling and reinforcing expectations that authorities will roll out more measures to support growth. Analysts polled by Reuters had expected annual consumer inflation to be 1.6% in October, the same as September, which was the weakest reading since January 2010. On a monthly basis, consumer inflation was flat in October, the National Bureau of Statistics said on Monday. That compared with 0.1% expected by economists. (Reuters)

China And South Korea To Sign Free Trade Deal. China and South Korea are set to sign a free trade agreement that aims to remove most barriers to trade between the countries. Leaders from both nations confirmed a conclusion had been reached after talks that spanned more than two years. The deal is expected to be signed on Monday and covers 17 areas such as e-commerce, Chinese officials said. China is South Korea's largest trading partner and their bilateral trade grew to $228.9bn in 2013. South Korea has been running a trade surplus with China since 1993, and the surplus was $62.8bn last year, according to South Korean data. (BBC)

China October Trade Data Shows Signs Of Manipulation, Hot Money Inflows: State Newspaper. China's exports and large trade surplus in October pointed to signs of manipulation and inflows of speculative hot money, the official Shanghai Securities News said on Monday, suggesting that firms continue to over-invoice trade deals to avoid capital controls. "There are signs that faked trade deals have raised their head of late," the newspaper said in a report, quoting economists. "The possibility of hot money inflows cannot be excluded as Chinese mainland's trade with the ASEAN nations, South Korea and Hong Kong grew rapidly in October, together with a jump in exports of precious metals," it said. On Saturday, China said its exports rose 11.6% in October from a year earlier, slowing from a 15.3% jump in September, but slightly better than expected. Imports rose an annual 4.6% in October, though slower than a 7% rise in September. That left the country with a trade surplus of a near record-high of $45.4b for the month. (Reuters)

Europe

Euro Zone Sentiment Recovers Slightly In November To -11.9. Sentiment in the euro zone recovered slightly in November after three months of decline as investors took heart that a more dynamic global economy propped up by the United States and Japan could lift the currency bloc, a survey showed on Monday. Sentix research group's index tracking morale among investors in the euro zone rose to -11.9 in November from -13.7 the previous month, bettering the consensus forecast in a Reuters poll for a reading of -13.5. (Reuters)

Russian Central Bank Cuts Growth Forecasts, Sees Sanctions Until 2017. Russia faces the prospect of three more years of sanctions and stagnation, the central bank said on Monday, honing its tactics to defend the rouble from the fallout of President Vladimir Putin's Ukraine policies and dependence on oil revenue. In its annual monetary policy strategy document, the bank's base scenario expected just 0.3% economic growth in 2014, zero growth in 2015, and 0.1% growth in 2016, with only a modest revival, to 1.6%, in 2017. It had earlier forecast 0.4% this year, 1% next year and 1.9 in 2016. The bank also predicted net private sector capital outflows would now reach $128b in 2014 and $99b in 2015, up sharply from its previous forecasts of $90b and $35b respectively. (Reuters)

Putin Says China, Russia To Settle More Trade In Yuan. Russia and China intend to increase the amount of trade settled in the yuan, President Vladimir Putin said on Monday in remarks that would be welcomed by Chinese authorities who want the currency to be used more widely around the world. Speaking at an Asia Pacific Economic Cooperation summit in Beijing, Putin also ruled capital controls for Russia and vowed to keep its foreign debt level below 15% of gross domestic product (GDP). "As part of our cooperation with this country (China), we intend to use national currencies in mutual transactions," Putin said. "The initial deals for rouble and yuan are taking place. I want to note that we are ready to expand these opportunities in (our) energy resources trade." (Reuters)

Currencies

Dollar Finishes Monday Higher Against Rivals. The U.S. dollar climbed against most of its rivals Monday, reversing broad losses from earlier in the session, pushed higher by falling oil prices and the strong performance of U.S. stocks. Meanwhile, the euro traded at $1.2430, compared to $1.2453 Friday. The ICE U.S. Dollar Index, a measure of the greenback’s strength against a basket of six currencies, was up 0.17% to 87.8160. The dollar also rose to 114.85 yen, compared to ¥114.60 late Friday. The pound traded at $1.5843, compared to $1.5872 Friday. (Market Watch)

Commodities

Oil Falls As Dollar Strength Offsets Libya, Ukraine Concerns. U.S. crude fell more than $1 on Monday, edging below $78 a barrel and Brent crude also dropped with both reversing early gains as U.S. dollar strength outweighed worries about conflict in Libya and Ukraine. U.S. front-month crude futures fell as low as $77.31 and last traded down 91 cents at $77.74 a barrel. Earlier in the session, the contract touched a high of $79.85. Brent crude also reversed early gains to trade lower, down 75 cents at $82.64. The spread between the two global benchmarks widened slightly to $4.90. (Reuters)

Gold Falls Over 2 Pct As Dollar Rises; Open Interest Eyed. Gold fell over 2% on Monday as the dollar rose, nearly wiping out its previous session's rally, but signs of renewed buying interest in the U.S. futures market could underpin prices, traders said. Spot gold was down 2.2% at $1,152.77 an ounce by 2:35 p.m. EST (1935 GMT). Among other precious metals, silver was down 1.6% at $15.53 an ounce. Platinum fell 1.4% to $1,195.50 an ounce, and palladium was down 1.2% at $759.10 an ounce. (Reuters)