Malaysia

BNM to Review Inflation Forecast if Oil Exceeds US$70. Bank Negara Malaysia may look into reviewing its inflation projection this year from the 2% to 3% earlier, if the oil price were to exceed US$70 per barrel. "At the moment, the assumption (made by the government) is at US$55 per barrel and we do expect that it would range between this figure and US$65 per barrel. So, we believe that it would not have a significant impact on consumption and inflation,” said BNM governor Tan Sri Dr Zeti Akhtar Aziz. At the current level, she said, the oil price is not going to have a significant adverse impact on inflation and consumption spending. (Bernama)

Asia

Economic Growth of 3% a Challenge for Thailand This Year. An economic growth rate of 3% for Thailand this year will be a challenge, the country's central bank governor said on Friday, indicating Southeast Asia's second-largest economy will expand well below the rate forecast by the government. Thailand has been hit hard by poor demand for its exports. "It's possible to be at that level but it's going to be a challenge," Bank of Thailand Governor Prasarn Trairatvorakul said. The central bank had said growth would miss its previous forecast of 3.8% but not flagged by how much. Prasarn said a "percent storm" that hit exports was behind the downgrade. (Reuters)

Indonesia’s Current Account Deficit Narrows in Q1. Indonesia's current account deficit narrowed in the first quarter from the previous one, helped by a better trade performance, the central bank said on Friday. The deficit for January-March was 1.8% of GDP or $3.8 billion, smaller than the 2.6% gap in the prior three months and a 1.92% in the first quarter of 2014. A large current account deficit has been one of Indonesia's economic problems and at times has pressured the rupiah, which in 2015 has been emerging Asia's weakest currency, depreciating 5.3% against the dollar. Gareth Leather of Capital Economics in London said the smaller deficit is encouraging and "should make Indonesia less vulnerable when the Fed comes to hike ". (Reuters)

Indonesia Auto Sales Fall 23.6% on Year. Indonesia's automobile sales in April fell 23.6% from a year earlier, the eighth straight decline on an annual basis and the biggest fall since September 2009, data from industry association Gaikindo showed on Friday. Annual sales have fallen due to weaker purchasing power and higher retail car prices. Auto sales also contracted 17.9% on a monthly basis, according to the data. A total of 81,600 cars were sold in Southeast Asia's biggest economy in April. Toyota Motor Corp led sales, followed by Daihatsu Motor Co Ltd and Honda Motor Co Ltd. (Reuters)

Japan's Travel Balance Turns Positive for First Time in 55 Years. Investment and services are playing an increasingly large role in fueling Japan's growth, a shift from the model that long relied on exports of cars, appliances and other goods to drive the economy. According to the Ministry of Finance's balance of payments statistics for fiscal 2014, Japan's travel balance moved into the black for the first time since fiscal 1959. Meanwhile, an increase in overseas mergers and acquisitions by Japanese companies pushed up the country's investment earnings to a record high. The travel balance, calculated by subtracting how much Japanese spend overseas from the amount foreign visitors shell out in Japan, achieved a surplus of 209.9 billion yen ($1.75 billion) in fiscal 2014, (Nikkei)

Japan's Consumer Confidence Worsens in April. Japanese consumer confidence in April worsened for the first time in five months, a Cabinet Office survey showed on Friday. The survey's sentiment index for general households, which includes views on incomes and jobs, was at 41.5 in April, down from 41.7 in March. The survey began in 1982. "General households" are those with two or more people. (Reuters)

USA

Weak Factory Data Point to Modest Q2 Economic Rebound. U.S. industrial production unexpectedly fell for a fifth straight month in April due in part to a further decline in oil and gas drilling, suggesting that the economy is growing at only a modest pace in the second quarter. The economy's struggle to pick up steam after a dismal first quarter was underscored by other data only a mild rebound in factory activity in New York state. Industrial output slipped 0.3% after a similar decline in March, the Fed said. Economists had expected a 0.1% gain. A plunge of 14.5% in oil and gas well drilling pushed mining production down 0.8% last month. It was the fourth straight monthly decline in mining output. (Reuters)

Consumer Sentiment Falls in May. U.S. consumer sentiment fell more than expected in May, to a seven-month low. The University of Michigan's preliminary May reading on the overall index on consumer sentiment was 88.6, down from the final April read of 95.9. Analysts were looking for a reading of 96.0. The survey's subindex on business conditions fell to 99.8 from 107.0 in April, while a reading on consumer expectations declined to 81.5 from 88.8. The median forecast of analysts polled by was for a reading of 107.0 for the conditions index and 88.6 for expectations. (Reuters)

Economists Cut Q2 Forecasts for U.S. Growth. Economists cut their forecasts for U.S. economic growth in the second quarter and full year, and trimmed expectations for U.S. labor market gains. Economists see the economy growing at an annual rate of 2.5% in the current quarter, according to the Philadelphia Federal Reserve's quarterly survey of 44 forecasters, released on Friday. In last quarter's survey, released in February, growth for this quarter was forecast at 3.0%. Full-year growth for 2015 was forecast at 2.4%, down from the previous estimate of 3.2%. The pace of hiring was expected to decelerate in the current quarter compared with previous expectations, with an average rate of monthly nonfarm job growth seen around 195,300 versus a previous forecast of 233,800. (Reuters)

Europe

Greek Endgame Nears as Bank Collateral Hits Buffers. Greek banks are running short on the collateral they need to stay alive, a crisis that could help force Prime Minister Alexis Tsipras’s hand after weeks of brinkmanship with creditors. As deposits flee the financial system, lenders use collateral parked at the Greek central bank to tap more and more emergency liquidity every week. In a worst-case scenario, that lifeline will be maxed out within three weeks, pushing banks toward insolvency, some economists say. “The point where collateral is exhausted is likely to be near,” JPMorgan Chase Bank analysts Malcolm Barr and David Mackie wrote in a note to clients May 15. “Pressures on central government cash flow, pressures on the banking system, and the political timetable are all converging on late May-early June.” (Bloomberg)

Currencies

Dollar Drops to Three-Month Low against Euro. The dollar fell to a three-month low against the euro on Friday, as disappointing data on U.S. domestic factory activity and consumer sentiment spurred doubts about the recovery in the world's largest economy. Against a basket of six major currencies, the dollar fell for a fifth straight week, the longest stretch of declines in four years. The dollar index was last down 0.3% at 93.204. In late trading, the euro rose 0.4% to $1.1455, after earlier hitting a three-month peak of $1.1466. It was about 9% higher than a 12-year low of $1.0457 reached on March 16. That was the day the European Central Bank embarked on its 1.1 trillion euro bond-buying program. Against the yen, the dollar was up 0.1% at 119.31 yen, shaving its weekly loss to 0.5%. The sterling was down 0.2% at $1.5738, leaving it with a weekly gain of 1.8%. The Aussie dollar fell 0.5% to US$0.8038 after hitting a near four-month high of US$0.8164 on Thursday. (Reuters)

Commodities

Brent Up, U.S. Crude Down as Oil Rally Comes into Question. Brent rebounded from Friday's early weakness while U.S. crude held to losses as traders and investors debated whether oil's rally over the past month and a half should continue amid stubbornly high supplies. Futures of North Sea Brent have rallied nearly 20% since the end of March, while U.S. crude futures have risen almost 30%. Crude inventories in the United States, meanwhile, remain near 80-year highs. To some, that suggests a market that has overshot and likely to correct. U.S. crude settled down 19 cents at $59.69 a barrel, after falling more than $1 during the session as a stronger dollar pulled down commodities denominated in the currency. Brent, the more important oil benchmark, settled up 11 cents at $66.81 a barrel. (Reuters)

Gold Steadies near Three-Month High. Gold held near three-month highs on Friday, heading for its biggest weekly gain since mid-January, as soft U.S. consumer sentiment data weighed on the dollar and further diminished expectations for a near-term rise in U.S. interest rates. Spot gold was up 0.3% at $1,224.53 an ounce at 1833 GMT, while U.S. gold futures for June delivery settled up 10 cents an ounce at $1,225.30. Prices are up 3% last week. Silver was up 0.5% at $17.51 an ounce and on track for its biggest weekly gain in nearly two months. Platinum was up 0.5% at $1,164.44 an ounce, while palladium rose 1.3% to $791.50 an ounce. (Reuters)