Malaysia

Moody's Maintains Stable Outlook for Malaysian Banking. The outlook of the Malaysian banking system is stable over the next 12 to 18 months due to a continued high degree of government support to the sector as well as bank’s strong capital and stable funding levels, says Moody’s Investors Service. Moody’s vice president and senior analyst Simon Chen said on Tuesday that these factors offset the moderate deterioration in the bank’s operating environment and profitability profiles. It added that the reduction is government’s expenditure and widening revenue sources will help stabilise the country’s fiscal position. However, it expects stability in the country’s low unemployment rates to offset the risk of high household loan rates. (The Star)

No Tightening Policy for First Time Home Buyers. Bank Negara Malaysia (BNM) today clarified that there is no tightening policy for first time buyers of affordable homes. "The tightening requirement is for the third purchase of residential properties to avoid the risk of over-leveraging and an over-indebted situation in the country," Governor Tan Sri Dr Zeti Akhtar Aziz said. She told the media this at the release of the Labuan Financial Services Authority (FSA) Annual Report 2014. "All borrowers need to pass the affordability assessment. We are doing this to guide banks to avoid the risk of over-leveraging and an over-indebted situation," she said. (The Star)

Asia

Singapore Q1 GDP Expands at Faster Pace on Stronger Manufacturing. Singapore's economy grew faster than initially estimated in the first quarter as manufacturing and services sectors showed more resilience. The trade-reliant economy expanded an annualized and seasonally adjusted 3.2% in the January-March quarter from the previous three months, the Ministry of Trade and Industry said on Tuesday. That far exceeded the 1.1% expansion in the government's advance estimate released in April. From a year earlier, GDP grew 2.6% in the first quarter. The government's advance estimate had been 2.1%. Growth in services-producing industries was revised up to 3.8% year on year from the advance estimate of 3.1%. (Reuters)

Singapore CPI Drop Biggest in Five Years. Singapore’s consumer prices recorded their biggest year-on-year drop in five years in April. The all-items consumer price index fell 0.5% in April from a year earlier, official data showed. That was the largest drop since late 2009 and exceeded the 0.1% drop expected by economists. The fall in headline CPI was mainly due to a sharper price drop in oil-related items and a moderation in services inflation, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said. Headline CPI fell from a year earlier for the sixth straight month, matching a similar half-year run recorded in 2009. The MAS core inflation rate slowed to a five-year low of 0.4% year-on-year, slipping to a level just below the central bank’s 2015 forecast range for core inflation. (Reuters)

Net FDI Inflows to India Touches Record High. While foreign portfolio investments to India are slowing, net foreign direct investment (FDI) inflows, which are far more stable, have touched a record high of $34.9 billion in 2014-15, according to information compiled by Nomura Global Markets Research. In fact, net FDI inflows reached 1.7% of gross domestic product GDP in the just-ended fiscal year, up from 1.1% of GDP the previous year. The reason: more inbound FDI due to growing investor confidence in India and lower outbound FDI as global growth remains anaemic, said Nomura in a note on Tuesday. Foreign investment inflows to India are predominantly to infrastructure, mainly telecom, oil and gas, mining sectors, as well as the services sector. (Hindustan Times)

USA

New Home Sales, Prices Rise Strongly in April. New U.S. single-family home sales rose more than expected in April and the median price surged, suggesting the housing market recovery was gaining traction. The Commerce Department said on Tuesday sales increased 6.8% to a seasonally adjusted annual rate of 517,000 units. March's sales pace was revised up to 484,000 units from the previously reported 481,000 units. Economists had forecast new home sales, which account for 9.3% of the market, rising to a 510,000-unit pace last month. The upbeat report added to housing starts data in indicating that housing was gaining momentum after treading water for much of last year. (Reuters)

Markit: Services Sector Growth Slows in May. U.S. services sector expansion slowed for a third straight month in May, weakening alongside new business activity, an industry report showed on Wednesday. Financial firm Markit said the "flash," or preliminary, reading of its Purchasing Managers Index for the services sector slipped to 56.4 in May from a final reading of 57.4 in April. A reading over 50 signals expansion in activity in the sector. Markit's May reading of new business fell to 55.8 from April's final reading of 57.7, though a subindex on employment improved slightly. (Reuters)

Consumer Confidence Rises in May. U.S. consumer confidence rose in May, according to a private sector report released on Tuesday. The Conference Board, an industry group, said its index of consumer attitudes rose to 95.4 from a downwardly revised 94.3 in April. Economists were looking for a May reading of 94.9. The April figure was originally reported as 95.2. (Reuters)

Currencies

Dollar Regains Mojo on Rate View, Hits Fresh High vs. Yen. The dollar held on to broad gains early on Wednesday, having rallied to an eight-year high against the yen after a batch of upbeat data bolstered the case for a U.S. interest rate hike this year. The greenback climbed as far as 123.33 yen, reaching a high not seen since mid-2007. It is now within reach of its June 2007 peak of 124.14. A break there would take it to levels last seen in late 2002. It also rose against the euro, which slid to its lowest since April 28 at $1.0864. The common currency last stood at $1.0872. All that helped the dollar index rally 1.3%, its biggest one-day gain in nearly two years. Commodity currencies also lost ground against the resurgent dollar, with the Australian dollar falling to a one-month low of $0.7727. (Reuters)

China's Yuan No Longer Undervalued. China's currency "is no longer undervalued", according to the International Monetary Fund (IMF). The US has long suggested that China has manipulated the value of the yuan to boost its exports. Undervaluation has been a problem in the past, says the IMF in a statement, but this is no longer the case. Substantial "appreciation over the past year has brought the exchange rate to a level that is no longer undervalued", it says. The IMF says China should focus on creating full exchange rate flexibility so that the value of the yuan adjusts as the country grows and believes that China should aim to achieve a floating exchange rate within the next two or three years. (BBC)

Commodities

Oil Falls as Dollar Strengthens, Ample Supply Weighs. Oil prices fell nearly 3% on Tuesday as the dollar's rally weighed on dollar-denominated crude oil futures along with concerns that a recent rally might keep U.S. producers active. The U.S. dollar index rallied as Greece's financial crisis and signs of increasing opposition to austerity in Spain pressured the euro. Friday's weekly data showed U.S. drillers cut the number of rigs by just one last week and Goldman Sachs said prices were at a level that would spur activity, adding to a growing list of headwinds crude faces that include rising OPEC supply. Brent crude for July delivery fell $1.80, or 2.75%, to settle at $63.72 a barrel, the weakest settlement since April 22. U.S. crude fell $1.69, or 2.83%, to settle at $58.03, having traded as low as $57.71. (Reuters)

Gold Drops Almost 2% as Dollar Rally Continues. Gold dipped almost 2% on Tuesday as the dollar extended gains following a raft of strong U.S. data and recent comments from Federal Reserve Chair Janet Yellen that reinforced the central bank's tightening bias on monetary policy. Spot gold dropped to a two-week low of $1,185.35 an ounce earlier and was down 1.7% at $1,186.90 by 1819 GMT, its biggest drop since April 30. Silver fell 2.3% to a two-week low of $16.72 an ounce. Platinum dropped 2.3% to $1,121.24 an ounce and palladium slipped 1% to $778.50 an ounce. (Reuters)