Global

· Global Economic Outlook Is Glum Despite Cheaper Oil: IMF. A sharp drop in oil prices and a stronger U.S. economy probably won't be enough to brighten the outlook for global growth this year, the head of the International Monetary Fund warned on Thursday. IMF Managing Director Christine Lagarde said that while cheaper oil would help the world's consumers, the United States would likely be the only major economy to buck a trend of weakness in investment and consumption. The euro zone and Japan risk suffering a long period of weak growth and dangerously low inflation, with the specter of a nightmarish deflationary spiral of falling prices and wages already looming over Europe, she said. At the same time, the IMF also sees growth slowing in emerging markets, led by a slowdown in China. Beyond being a boon for consumers, she said low oil prices are more a "golden opportunity" for countries to reduce energy subsidies and focus government spending more on alleviating poverty. (Reuters)

Malaysia

· World Bank Sees Need To Address High Debt. Malaysia’s policymakers needs to address the country’s high debt growth, said the World Bank. In its latest Global Economic Prospects which was released yesterday, the World Bank said the need for slowing the growth of debt is particularly acute in Malaysia and neighbouring Thailand. Countries are challenged by a buildup of debt while adjusting monetary and exchange rate policies in response to tightening financing conditions and soft commodity prices. “Although they would also reduce inflation pressures across the region, monetary policy remains constrained by high levels of domestic debt in several countries.” Household debt expanded rapidly to 72% of GDP in Thailand, and has reached 87.1% of GDP in Malaysia in the third quarter of 2014. (NST)

Asia

· Modest Japan Machinery Orders Heightens Doubts About Capex Strength. Japan's core machinery orders rose less than expected in November due to declining orders in the manufacturing sector, suggesting companies are still cautious about capital expenditure due to worries about domestic demand. The 1.3% rise in core orders, which exclude those of ships and electric power utilities, compared with a 5% rise forecast by economists in a Reuters poll. It followed a 6.4% decline in October. Lacklustre business investment suggests that the economic recovery will be weak after an increase in the sales tax last year triggered a shock recession – a worry for Prime Minister Shinzo Abe. (Reuters)

· India Cuts Interest Rates In A Surprise Move. India's central bank made a surprise move on Thursday to cut its interest rate to 7.75%, thanks to lower-than-expected inflation. The benchmark interest rate, or the level at which The Reserve Bank of India (RBI) lends to commercial banks, had been kept at 8% since last January. The move came ahead of the bank's regular meeting next month and analysts said it paved the way for further cuts. (BBC)

· Indonesia Holds Rate With Inflation Fastest In Five Years. Indonesia’s central bank kept its main interest rate unchanged for a second straight month, as a persistent decline in oil prices reduces pressure for monetary tightening to cool inflation. Bank Indonesia Governor Agus Martowardojo and his board left the reference at 7.75%, the central bank said in Jakarta today, as predicted by all but one of 20 economists surveyed by Bloomberg News. The authority kept the rate it pays lenders on overnight deposits, known as the Fasbi, unchanged at 5.75%. (Bloomberg)

· Bank Of Korea Cuts 2015 Inflation, Economic Growth Forecasts. South Korea’s central bank cut its forecasts for consumer prices and economic expansion this year following a policy meeting at which it kept the benchmark interest rate unchanged at a record low. Inflation will slow to 1.9%, from a previous estimate of 2.4%, Governor Lee Ju Yeol said today after the bank held the seven-day repurchase rate at 2%. Gross domestic product growth is expected to ease to 3.4%, compared with an earlier projection of 3.9%. (Bloomberg)

USA

· Consumer Confidence In U.S. Increases To Highest Level Since July 2007. Consumer confidence increased last week to the highest level since mid-2007 as steady declines in gasoline prices and more hiring boosted Americans’ attitudes about the economy. The Bloomberg Consumer Comfort Index (COMFCOMF) rose to 45.4 in the period ended Jan. 11, the highest reading since July 2007, from 43.6 the week before. A measure of households’ views of the economy was also the strongest in more than seven years. (Bloomberg)

· Cheaper Oil Tames U.S. Producer Inflation; Jobless Claims Up. U.S. producer prices in December recorded their biggest fall in more than three years on tumbling energy costs while underlying inflation pressures were tame, a cautionary note for the Federal Reserve as it ponders its next step on monetary policy. The Labor Department said on Thursday its producer price index for final demand declined 0.3%, the biggest drop since October 2011, after falling 0.2% in November. "That makes the Fed's job more difficult," said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh. "We expect inflation to slow ... the Fed needs to be more cautious about raising interest rates." In the 12 months through December, prices at the factory gate increased 1.1%, the smallest gain since November 2013, after rising 1.4% in November. A broader measure of underlying producer inflation pressures that excludes food, energy and trade services edged up 0.1% after being flat in November. (Reuters)

Europe

· Swiss Central Bank Stuns Market With Policy U-Turn. The Swiss National Bank shocked financial markets on Thursday by scrapping a three-year-old cap on the franc, sending the currency soaring against the euro and stocks plunging on fears for the export-reliant Swiss economy. Only days ago, SNB officials had described the 1.20 francs per euro cap, introduced in 2011 at the height of the euro zone crisis to fend off deflation and a recession, as a policy cornerstone. The U-turn sent the franc nearly 30% higher against the euro in chaotic early trading. Coming a week before the European Central Bank is expected to unveil a bond-buying program to counter deflationary pressures, it fed speculation that this quantitative easing (QE) scheme will be so big that the SNB would have struggled to defend the cap. (Reuters)

· Falling Euro, Energy Costs Widen Euro Zone Surplus In November. A slight increase in exports and lower imports helped the euro zone widen its trade surplus in November, helped by a weaker euro and oil prices that are cushioning the impact of a dramatic drop in sales to Russia. Unadjusted for seasonal swings, exports to the rest of the world rose 1% and imports fell 2%, swelling the bloc's trade surplus to 20b euros ($23.5b) versus 16.5b euros in November 2013, the EU's statistics office Eurostat said on Thursday. (Reuters)

· Consumers, Foreign Trade Drove German 2014 Growth Of 1.5%. Consumers and foreign trade fueled a 1.5% expansion in the German economy in 2014, its best performance in three years, which will prop up the euro zone reading but masks weakness in the final three quarters of the year. Private consumption contributed 0.6%age points to growth last year, preliminary data from the Federal Statistics Office showed, as record high employment, rising wages and moderate inflation boosted household spending. Foreign trade, a traditional driver of Germany's economy that has lost steam in recent years and dragged on growth in 2013, added 0.4%age points despite persistent sluggishness in Europe, its top export market, and wars in Ukraine and the Middle East. (Reuters)

Currencies

· Swiss Franc Soars After SNB Abandons Cap On Currency. The Swiss franc soared nearly 28% against the dollar on Thursday after Switzerland's central bank dumped a three-year-old cap on the franc's value against the euro, sending shockwaves through currency markets and pummelling traders who had bet against the franc. The euro plunged as much as 30% below the 1.20 cap to 0.8500 francs per euro at one point before rebounding to roughly 1.06 francs. The dollar plummeted to 0.736 francs, lowest since 2011, before paring losses. Broader concerns about the euro sent it to its weakest in 11 years against the dollar. Against the dollar, the euro was last down 1.33% at $1.1632. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.23% at 92.375, and earlier touched an intraday high not seen since November 2003. The dollar was last down 0.23% against the safe-haven Japanese yen at 117.07 yen. (Reuters)

Commodities

· Oil Prices Retreat Again As Oversupply Bites. Crude oil prices fell on Thursday, with both Brent and U.S. WTI futures dropping around one dollar because of a global oversupply, following a volatile session the previous day when prices had rebounded sharply from near-six-year lows. By 0836 GMT, Brent was down $1.31, or 2.6%, at $48.55 a barrel, while U.S. crude was trading at $47.59 a barrel, down 89 cents. (Reuters)

· Gold Jumps 3% To 4-Month High After SNB Move. Gold rose as much as 3% to a four-month high on Thursday after Switzerland's central bank unexpectedly abandoned its three-year cap on the franc sent global shares and bond yields into turmoil. "Currency chaos is really the phrase of the day," said Bill O'Neill, co-founder of commodities investment firm LOGIC Advisors in Upper Saddle River, New Jersey. Spot gold rose as much as 3% to its highest since Sept. 8 at $1,266.11 an ounce, and was up 2.3% at $1,258.21 by 2:42 p.m. EST (1942 GMT). Silver climbed to a one-month high of $17.21 an ounce and was up 0.4% at $16.89 an ounce, while platinum rose 2.1% to $1,254.98 an ounce, and palladium gained 1.3% to $762.98 an ounce. (Reuters)