Malaysia

 · Malaysia's January Trade Weakened By Fall Of Commodity And China Demand. Both exports and imports contracted in January from the previous year below consensus and our estimates. Exports fell 0.6% well below consensus’ 3.0% increase while imports by a larger proportion of 5.3% (consensus: +2.0%). On a MoM basis, exports and imports declined by 6.0% and 6.7% respectively, resulting in a trade surplus of RM9.0b, just under the RM9.2b achieved in December. The weak January export data was largely attributed to low commodity prices and poor demand from buyers in China. The relatively weak ringgit did not boost imports as expected. Instead, the value of intermediate goods, accounting for 60.6% of all imports, fell 3.0% YoY, suggesting weaker demand for manufactured goods going forward. Overall imports fell 5.3%, its lowest since December 2012. (Please refer to Economic Viewpoint for further comments)

 · BNM’s International Reserves At RM386b As Of Feb 27. Bank Negara Malaysia’s (BNM) international reserves amounted to RM386.0 billion (equivalent to US$110.5 billion) as at Feb 27, 2015. The central bank said the reserves position was sufficient to finance 7.9 months of retained imports and was 1.1 times the short-term external debt. The main components of the international reserves were foreign currency reserves (US$101.0 billion), International Monetary Fund position (US$0.9 billion), Special Drawing Rights (SDRs) (US$1.9 billion), gold (US$1.4 billion) and other reserve assets (US$5.3 billion). (Bernama)  

Asia · Japan Q4 GDP Revised Down To +1.5 Pct Annualised. Japanese gross domestic product rose an annualised 1.5% in the October-December quarter, revised government data showed on Monday, less than the preliminary reading of a 2.2% increase as consumer spending and capital expenditure weakened. The median forecast was for 2.2% annualised growth in a Reuters poll of economists. On a quarter-on-quarter basis, the economy grew 0.4% in the fourth quarter, the Cabinet Office data showed. That compared with a preliminary reading of a 0.6% increase and the median estimate of 0.6% growth. Capital expenditure fell 0.1% from the previous quarter, versus a preliminary 0.1% increase and below the median estimate of a 0.3% expansion. (Reuters)  

· Exports Jump In China, But Slide In Imports Signals Economic Weakness. China's exports jumped 48.3% in February from a year earlier - the strongest in nearly five years that comfortably beat market expectations - while imports slipped 20.5%, the General Administration of Customs said on Sunday. That produced a record trade surplus of $60.6 billion for the month. That compared with market expectations in a Reuters poll of a rise of 14.2% in exports - following a 3.3% drop in January. Imports fell 10% in January for a trade surplus of $10.8 billion. Analysts tend to look at the combined trade data for the two months to help smooth out distortions caused by the long Lunar New Year holiday, which fell in mid-February this year but in early February in 2014. The customs office said local exporters usually make concentrated shipments ahead of the new year, which may have distorted export figures for January and February. For the first two months of 2015, exports rose 15% from a year ago, while imports fell 20.2%. (Reuters)  

· China's Finance Minister Flags Wider Fiscal Deficit As Economy Cools. China will pursue an expansionary fiscal policy this year to prevent its economy from stalling, Finance Minister Lou Jiwei said on Friday as he assured investors that authorities are keeping an eye on heavily-indebted local governments. Asked how China would manage its rising debt levels as its economy loses steam, Lou said the country has to balance the need to deleverage without pushing the economy over a "cliff". To underscore the importance of state spending, he said China's actual fiscal deficit should be worth 2.7% of its 2015 gross domestic product (GDP) after taking into account 112.4 billion yuan ($18 billion) that was allocated to previous budgets but was not yet spent. China had announced on Thursday a planned 2015 fiscal deficit of 2.3% of GDP, or 1.62 trillion yuan ($258.61 billion), at the opening of the annual meeting of the National People's Congress, the country's parliament. A fiscal deficit of 2.7% compared with last year's deficit of 2.1% and would be China's widest since 2009, when Beijing splurged on stimulus to counter the global financial crisis and chalked up a deficit of 2.8%. (Reuters)

USA

· America’s Job Machine Powers On Even As Wages Lag. The U.S. job-creation machine kept exceeding expectations in February. Wages continued to disappoint. Employers added 295,000 workers to payrolls last month, more than forecast, and the unemployment rate dropped to 5.5%, the lowest in almost seven years, figures from the Labor Department showed Friday in Washington. The drop in the unemployment rate was bigger than projected, and down from 5.7% in January. Hourly earnings rose less than forecast. The jobless rate has now reached the Federal Reserve’s range for what it considers full employment, keeping policy makers on course to raise interest rates as soon as June. The median forecast in a Bloomberg survey of economists had December’s deficit was revised to $45.6 billion from an initially reported $46.56 billion. Economists had forecast a trade deficit of $41 billion in January. Overall, exports decreased 2.9% from December to $189.41 billion, and imports also fell 3.9% to $231.16 billion. The drop off in both imports and exports reflects an array of factors, primarily the steep drop in crude oil prices, but also disruptions related to a West Coast port labour dispute, a firming dollar and the relative strength of the U.S. economy. The trade deficit for petroleum products fell to $10.69 billion, its lowest level since November 2003. Nonpetroleum imports registered at $168.99 billion on a seasonally adjusted basis, down from December’s $172.27 billion and the highest level on record. (The Wall Street Journal)

· U.S. Consumer Credit Rises At Slowest Pace Since November 2013. Consumer borrowing in the U.S. increased in January at the slowest pace since November 2013 as Americans cut back on their credit-card use. The $11.6 billion advance followed a $17.9 billion gain in the previous month that was bigger than previously estimated, Federal Reserve figures showed Friday in Washington. Non-revolving debt, such as that for college tuition and the purchase of vehicles and mobile homes, climbed $12.7 billion in January, the report showed. Revolving debt, including credit cards, fell $1.2 billion following a $6.2 billion increase. (Bloomberg)

Europe

· German Industrial Output Rises For Fifth Straight Month In January. German industrial output rose more than expected in January, notching up its fifth straight monthly increase and providing reassurance that Europe's largest economy got off to a strong start in 2015 after industrial orders data cast some doubt. Economy ministry data on Friday showed production up 0.6% month-on-month, overshooting the consensus forecast for a 0.5% rise. The main driver was construction with a 5.0% jump thanks to a mild winter, the ministry said. In a further positive sign, the December figure was heavily revised up to a rise of 1.0% from a previously reported gain of just 0.1%. The latest figures mark the first time since early 2011 that industrial production has increased for five months in a row. (Reuters)

· Eurozone GDP (Final) Grows, With Drivers Broad-Based. The modest pickup in eurozone economic growth in the final months of last year was aided by rising investment and exports, a boost to hopes that the currency area's recovery will strengthen this year. The European Union's statistics agency Friday confirmed that the combined gross domestic product of the 18 countries that then used the euro was 0.3% higher in the fourth quarter of last year than in the third - a slight acceleration. Eurostat's breakdown of economic activity showed the sources of growth were more broad-based than in the previous quarters of 2014, when consumer spending had been the dominant driver of modest expansions. Consumer spending slowed in the fourth quarter and made a smaller contribution to growth than in the three months to September. However, investment increased 0.4%, having been flat in the third quarter, while exports also boosted growth, having made no contribution in the third quarter. (MarketWatch)

Currencies

· Dollar Index Hits 11-Year High On Strong Jobs Report. The ICE U.S. Dollar Index rose for the second- straight week Friday, after the Bureau of Labor Statistics’ February non-farm payrolls number exceeded expectations and the euro dropped to its lowest level versus the U.S. unit in more than 11 years. The ICE U.S. Dollar Index, a measure of the buck’s strength against a basket of six rival currencies, finished the day up 1.3% to 97.63, its highest level in more than 11.5 years. The dollar’s exchange rate with the euro comprises more than half of the index’s value. Friday’s gains pushed the index to its largest annualized gain since March 1985. The euro was at $1.0844 in recent trade after falling to its lowest level since 2003 at $1.0839 after the jobs report. It had traded at $1.1030 late Thursday. The dollar retreated slightly after hitting a fourmonth high of 121.27 yen, nearing its highest level against the Japanese currency since the summer of 2007, compared with ¥120.14 late Thursday in New York. The buck also rose to its highest level against the South African rand in 13 years after the report, trading at 12.05 rand to the dollar, compared with 11.84 Thursday. The pound traded at $1.5037 after the report, its lowest level in about a month. It had traded at $1.5238 Thursday. (MarketWatch)

Commodities

· Oil In Biggest Weekly Drop Since January On Dollar, Rate-Hike Fear. Crude oil prices closed down on Friday, with benchmark Brent losing its most in a week since January, as a resurgent dollar and fear of a U.S. rate hike diverted attention from the shrinking number of rigs drilling for oil in the United States. Worries about the security of Libyan and Iraqi crude supplies, which had put a floor beneath the market in early trade, also took a backseat. A strong dollar makes oil, quoted and traded in the greenback, costlier for holders of the euro and other currencies. Benchmark Brent oil settled down 75 cents, or 1.2%, at $59.73 a barrel. It fell 4% on the week, its sharpest decline since the week ended Jan 9. U.S. crude settled down $1.15, or 2.3%, at $49.61 a barrel. It posted a slight loss on the week, for a third straight week of declines. The number of rigs drilling for oil in the United States fell by 64 this week to 922, the smallest number in operation since April 2011, oil services firm Baker Hughes said in a weekly survey. (Reuters)

· Gold Sinks Nearly 3 Pct To 3-Mth Lows After U.S. Jobs Data. Gold fell nearly 3% to a three-month low on Friday after stronger-than-expected U.S. non-farm payrolls fueled expectations the Federal Reserve will raise rates sooner rather than later, and the dollar jumped to an 11-1/2 year high. Spot gold was down 2.6% at $1,167.40 by 2:38 p.m. EST (1938 GMT), on track for its biggest daily drop since October 2013. The metal was heading for a fifth straight session of losses and the biggest weekly drop in a month. Spot silver was down 2% at $15.84 an ounce, after falling to a two-month low of $15.74. Palladium was off 1.1% at $815 an ounce, and platinum dropped 1.7% to $1,154.75 an ounce. (Reuters)called for a 235,000 advance in February payrolls. Estimates ranged from 150,000 to 370,000. Average hourly earnings rose 0.1% from the prior month after advancing 0.5% in January. The median forecast called for a 0.2% gain. Earnings were up 2% over the past year, also less than projected and matching the increase on average since the expansion began in mid-2009. (Bloomberg)  

· U.S. Trade Gap Narrows In January. Cheaper U.S. energy prices and lower demand for foreign oil helped narrow the U.S. trade gap in January. The trade deficit shrank to a seasonally adjusted $41.75 billion in January, the Commerce Department said Friday, as crude imports fell and created the lowest deficit for petroleum products in over a decade.