Global

· China Welcomes Denmark, Australia to AIIB. China’s Ministry of Finance welcomed the decision by Denmark and Australia to join the China-led Asian Infrastructure Investment Bank (AIIB). The ministry said in a statement that Denmark filed its application letter on Saturday while Australia made its application on Sunday. China would first seek the opinions of other existing members, and if approved, both Denmark and Australia would officially become founding members of the AIIB on April 12 and April 13 respectively, the ministry said in the statement which was posted on its official website. France, Germany, Italy and Luxembourg have recently announced their intentions to join the AIIB, following the United Kingdom’s confirmation to become one of the founding members of the financial institution on March 12. (Bernama)

Malaysia

· Banking, Financial Sector to See Little Impact From GST. The implementation of the Goods and Services Tax (GST) in the banking and financial sector will have minimal impact on consumers, said Senior Assistant Director of the Royal Malaysian Customs Department (Banking and Finance), Rozila Saad. Speaking to reporters, she said the new tax would only be imposed on fees in every banking transaction and not on the amount of the transaction. "The impact on this sector is rather small as most of the activities carried out are exempted except for transactions that are based on fees only." A total of 12 activities under the banking and financial sector are exempted from GST including account and loan operations. However, interbank transactions will be subjected to GST. She added that investments as well as holdings on bonds and financial instruments were also exempted from the tax, while for MEPS services; GST would only be imposed on the transaction charges. Life insurance was also exempted from GST while general insurance will be subjected to the tax. GST would not be imposed on road tax. (Bernama)

· No Plans for Ringgit Peg. The government has no plans to peg the ringgit against the US dollar to address its depreciation, Deputy Finance Minister Datuk Chua Tee Yong said. He said the current situation is different from the financial crisis in 1997-1998 when such measure was taken as the country's economic condition now is on a strong footing. "A drastic measure like pegging the ringgit is only for extreme situations and we are not embroiled in a quandary," he said when replying to a supplementary question from Datuk Seri Abdul Ghafur Salleh (BN-Kalabakan) at the Dewan Rakyat today. Chua said Bank Negara Malaysia has provisions to prevent speculation of the ringgit. Earlier, he said that while depreciation of the ringgit would lead to higher production costs due to rising prices of imported raw materials, the impact would be absorbed by the prices of raw materials which would be lower due to slumping oil and commodity prices. (Bernama)

Asia

· Japan Industrial Output Decline Raises Doubts about Domestic Demand. Japan's industrial output fell in February at the fastest pace in eight months due to declines in production of machinery, cars and electronics in a worrying sign that domestic demand could be faltering. Economists were already braced for a fall as many companies were expected to trim output due to the timing of Lunar New Year holidays, but the 3.4% month-on-month decline in February was much worse than expected at almost double the median estimate for a 1.8% fall. Manufacturers' forecasts for the coming months still point to a gradual recovery in output, but the outlook is less certain. February's output slump was the biggest since June last year, when production also fell by 3.4%. Manufacturers surveyed by the trade ministry expect output to fall 2.0% in March and rise 3.6% in April. In January output rose 4.0%, the biggest increase in nearly four years partly as demand surged before the Lunar New Year. (Reuters)

· Thai Factory Output Ends 22-Month Decline. A 22-month streak of declining Thai factory output has ended, lifting hopes for an economic recovery, but a member of the country's monetary policy committee warned that the traditional growth drivers are "not really working anymore". On Monday, the government reported two encouraging pieces of data about the economy, which has long struggled to gain some traction and grew only 0.7% last year. The Industry Ministry said factory output in Southeast Asia's second-largest economy in February rose 3.55% from a year earlier, the first increase since March 2013. Also, the Finance Ministry said the number of tourist arrivals in February was 2.69 million, 29.6% more than a year earlier. January's number rose 16.3%. Despite the positive data, Sethaput Suthiwart-Narueput, one of seven members of Thailand's monetary policy committee, sounded a note of caution. Thai growth will depend on private investment, and much of the private sector "is in wait-and-see mode", he said. (Reuters)

· South Korea Central Bank Chief Says Weak Consumption Holding Back Recovery. Weak consumption is the biggest factor holding back South Korea's economic recovery, the country's central bank governor said, cautioning that a return to solid growth is some way off. "Sluggish domestic demand centred around consumption is the main factor that we see harming the pace of economic recovery," Bank of Korea Governor Lee Ju-yeol told reporters at a lunch briefing at the central bank headquarters in Seoul on Tuesday. "Meanwhile looking at exports, they are expanding in terms of volume but cannot be seen as a factor that can change our economic outlook greatly.It will be difficult for the economy to escape current difficulties in a short period of time," Lee said. (Reuters)

· Bank Indonesia says it Doesn't Have the Luxury to go against Market. Indonesia's central bank doesn't have the luxury to go against what is happening in the global financial market, senior deputy governor said, suggesting that Bank Indonesia would keep its policy tight next month. Bank Indonesia kept its key interest rate on hold at 7.50% in the eve of the U.S. Federal Reserve's meeting this month, but analysts have said it has scope to cut sometime this year. Analysts said the central bank had shifted its "stability over growth" stance when it cut its key interest rate by 25 basis points in February, but had to pause in March after the rupiah weakened to a 17-year low at 13,244 per dollar in March. Bank Indonesia's Senior Deputy Governor Mirza Adityaswara said the central bank is supporting a "pro-growth" stance through stabilization. "We, emerging markets, don't have the luxury to make a policy that is against what is happening in the global financial market. We are not dollar-printer," Adityaswara said late on Monday. (Reuters)

USA

· U.S. Consumer Spending Tepid; Savings at Two-Year High. Consumer spending barely rose in February as households boosted savings to their highest level in more than two years, the latest sign that the economy hit a soft patch in the first quarter. The Commerce Department said on Monday that consumer spending edged up 0.1% after dropping 0.2% in January. Households cut back on purchases of big-ticket items like automobiles, but a cold snap lifted spending on utilities. Economists had expected consumer spending, which accounts for more than two-thirds of U.S. economic activity, to increase 0.2% last month. When adjusted for inflation, consumer spending dipped 0.1% last month, the weakest reading since April of last year, after rising 0.2% in January. (Reuters)

 Europe

· Confidence in Eurozone Economy Near a Four-Year High. Confidence in the eurozone's economy rose for a fourth straight month in March to its highest since July 2011, a European Commission survey showed on Monday, suggesting the weak euro and lower oil prices are spurring the recovery. The European Commission's economic sentiment indicator rose by 1.6 points to 103.9, better than the 103.1 economists had forecast and building on a recovery that began in December. Business morale improved by 0.14 points to 0.23. "The recovery is not only gaining momentum but broadening," said Frederik Ducrozet, senior euro zone economist at Credit Agricole. "The ECB's helping with the euro, you have oil stabilising and there is no major deflation threat." Italy showed the biggest jump in morale, increasing 2.4 points, followed by Germany, Spain and the Netherlands. Overall, euro zone households appeared much more optimistic. Still, the euro zone's recovery is fragile and its economies are diverging. Economic morale in France, the euro zone's second-largest economy, rose just 0.4 points in March. (Reuters)

· Greek Reforms List Proposes Bad Bank, Lowers Asset Sales Target. Greece's government has proposed setting up a bad bank to deal with the rising level of bad loans and estimates it will raise a smaller than expected sum of about 1.5 billion euros from asset sales this year, a finance ministry official said on Monday. The measures were included in a package of reforms submitted to euro zone lenders late last week in the hope of unlocking aid. The reforms list also pledged to reduce early retirements to cut the burden on the country's tottering pension system but sought to avoid any tax hikes in the key tourism sector. Athens' estimate of 1.5 billion euros ($1.63 billion) in proceeds from privatizations this year is about 30% less than the current target of 2.2 billion euros included in Greece's bailout program. The list also proposes the bad bank be set up with 10.9 billion euros in bank bailout funds that were returned to the euro zone last month.

· German Prices on Track for First Rise This Year. German consumer prices are set to rise in March after falling in the first two months of this year, data from some federal states suggested on Monday, but inflation in Europe's largest economy is still likely to remain very low. Data from four states showed the cost of living picking up on an annual basis. In North Rhine-Westphalia (NRW), Germany's most populous state and a bellwether for the national rate, prices climbed by 0.2% on the year in March after coming in unchanged in February.

Currencies

· Yen, Aussie Hit Hard as Dollar Gains Traction. The dollar was firmer against most of its peers early on Tuesday, having posted its biggest one-day rally in over a month against the yen and notching up solid gains on its Australian counterpart. Traders pointed to a variety of reasons including month-end and quarter-end flows that helped underpin the greenback. The dollar fetched 120.15 yen, well off Monday's trough of 119.105. The bounce offered hope that its recent slide from a near eight-year peak of 122.04 to 118.33 might have run its course for now. The greenback firmed only modestly against the euro, which last stood at $1.0823, down from Monday's high of $1.0900. Recent failed attempts to break above $1.1000 have frustrated those trying to push up the euro. As a result, the dollar index climbed to 98.070, pulling further away from a low of 96.170 set last week after a dovish steer from the Federal Reserve unsettled dollar bulls. Among the worst performing major currencies overnight was the Australian dollar, which skidded more than one U.S. cent to as low as $0.7633. It last stood at $0.7650, back near a six-year trough of $0.7561 set earlier in the month. Persistent weakness in commodity prices, worries about slower Chinese growth and expectations of interest rate cuts at home have conspired to knock the Aussie lower. (Reuters)

Commodities

· Oil Down as Iran Races for Tuesday Deadline on Nuclear Deal. Oil settled down for a second straight session on Monday as Iran and six world powers tried to negotiate a deal on Tehran's nuclear program that could end Western sanctions and allow the OPEC member to ship more crude into an already flooded market. Crude prices finished sharply off the day's lows, however, as prospects that the talks would produce a deal looked even at best, with just 24 hours before the March 31 deadline. Iran and negotiators for the world powers have made progress in their discussions, according to officials following the talks in Lausanne, Switzerland, and many investors believe there will be some sort of an agreement to free Tehran from at least part of the U.S.-led sanctions that have restricted its oil exports. Benchmark Brent oil settled down 12 cents at $56.29 a barrel, after falling $1.21 earlier. U.S. crude finished down 19 cents at $48.68, having slid by $1.26 earlier. (Reuters)

· Gold Drops on Strong Dollar, Fed's Yellen Rate Hike Comment. Gold fell more than 1% on Monday, its biggest drop in more than three weeks, as the dollar climbed on increasing prospects that the U.S. Federal Reserve may start raising interest rates this year. Spot gold fell as much as 1.4% to a one-week low of $1,182.05 an ounce, slightly cutting losses to trade down 1.1% at $1,198 by 1833 GMT. U.S. gold futures for April delivery dropped 1.3% to settle at $1,184.80 per ounce. Spot palladium was down 1.4% at $739.30 an ounce, after falling 2.3% to $721.98, the lowest since February 2014 with traders pointing to technical selling. Spot silver fell 1.5% to $16.95 an ounce and platinum dropped 1.7% to $1,135.50 an ounce.