Malaysia

Consumer Price Index Up 2.1% YoY Matching Expectations. As anticipated, consumer price inflation continued to rise in May, the second month of the new Goods and Services Tax (GST), on further pass-through of GST-related costs. Headline inflation of 2.1% YoY in May exactly matched both consensus and house estimates, and was higher than the previous month’s 1.8% and the 1Q15 average of 0.7%. The two main categories of Food & Non-Alcoholic Beverages and Housing, Water, Electricity, Gas & Other Fuels, up 3.5% and 2.6% YoY respectively, contributed the most to the increase in the Consumer Price Index (CPI). Transport costs were stable compared to the previous month but on a YoY basis was 4.7% lower. (See Economic Viewpoint)

Asia

Bank of Japan's Kuroda Says Yen Weakness Not So Harmful. Bank of Japan Governor Haruhiko Kuroda said the yen's current weakness was not inflicting severe pain on the economy, toning down an earlier warning to markets against pushing the currency too far down. "At present, I don't think yen declines are causing severe damage to Japan's economy," Kuroda told reporters on Friday. "There's absolutely no truth to the view that the weak yen will deprive monetary policy of flexibility." The BOJ board voted 8-1 to stick with the current strategy of increasing base money at an annual pace of 80 trillion yen ($650 billion) through aggressive asset purchases. It also maintained its rosy assessment of the economy, as it continues to recover. (Reuters)

Bank of Japan to Cut Number of Policy-Setting Meetings from Next Year. The Bank of Japan said on Friday it will reduce the number of policy-setting meetings it holds each year to eight from the current 14, starting next year, in line with a trend among global central banks. The Japanese central bank also said it will issue long-term economic and price forecasts in January, April, July and October each year. Now, it issues such reports in April and October. The European Central Bank and the U.S. Federal Reserve also each hold eight policy-setting meetings a year. (Reuters)

Thai Central Bank Cuts 2015 Growth Forecast, Sees Falling Exports, Prices. Thailand's central bank cut its 2015 growth forecast and said exports and consumer prices will fall this year. The Bank of Thailand (BOT) lowered its growth projection to 3.0% from 3.8% seen three months ago. A year ago the central bank had forecast 5.5 growth for 2015. Significantly, the BOT now says that exports will contract 1.5% this year instead of rising 0.8%. And while it contended the "probability of deflation" is low and that prices will rise in the fourth quarter, the central bank said it expects consumer prices to decline 0.5% this year rather than increase 0.2%. (Reuters)

China Central Bank Data Shows Second Month of Net FX Inflows in May. China's central bank and commercial banks bought a net $5.2 billion in foreign exchange in May, official data showed, indicating small money inflows. Net currency purchases were 32.2 billion yuan ($5.19 billion)in May, according to calculations based on central bank data released on Friday. That followed net buying of 32.4 billion yuan in April, reversing net selling of 156.5 billion yuan in March. (Reuters)

Europe

French Growth Picking Up, Soon to Halt Jobless Rise. France's economy will expand fast enough in the second half of the year to halt the rise in unemployment, albeit with joblessness topping 10%, the national statistics office INSEE said on Thursday. In an outlook update, INSEE said it expected France to grow 1.2% in 2015 after an insipid 0.2% in 2014. Growth will be driven primarily by greater spending power and household consumption, and by higher export levels. The modest growth rates should be enough to halt the rise in the jobless rate at 10.1% for mainland France. (Reuters)

Greek Deposit Outflows Reach about $1.3 Billion Friday. Greeks pulled more money from banks on Friday with outflows estimated at around 1.2 billion euros ($1.3 billion), bringing the total outflow for the week to about 4.2 billion euros, three bankers said on Friday. "Today was a more difficult day compared to yesterday," one of the bankers said. "Monday will likely be tough as well." Earlier on Friday, the European Central Bank raised the emergency liquidity ceiling banks can draw from the domestic central bank without specifying by how much. (Reuters)

Greece Offers New Proposals Ahead of Emergency Summit. Greek Prime Minister Alexis Tsipras made a new offer on a reforms package to foreign creditors on Sunday, signaling 11th-hour concessions to break a deadlock that has pushed Greece to the brink of bankruptcy. French President Francois Hollande, on a visit to Milan, confirmed Greece had offered new proposals. It was not immediately clear how far the new proposal yielded to creditors' demands for additional spending cuts and tax hikes. (Reuters)

Currencies

Greece Debt Fears Sting Euro, Steady Dollar. The euro declined against other major currencies on Friday, weighed down by anxieties Greece may soon default on debts that also drove safe-haven buying of the dollar. The euro was last off 0.02% against the dollar at $1.1355, after sinking under $1.13. Versus sterling, which strategists say is something of a safe-haven, the euro fell as low as 71.22 pence, its weakest since May 28. It was last down 0.11% to 71.48 pence. The euro was also lower against the Swiss franc and yen, both traditionally safe plays. The dollar had been trading weakly since Wednesday, when Federal Reserve policymakers dulled expectations of imminent hikes in U.S. interest rates, but rose modestly on Friday. The dollar index was up 0.02% after touching its lowest in a month on Thursday. The dollar gave up early gains against the yen, hurt by a price rally in Treasuries debt that lowered U.S. bond yields. It last stood at 122.62 yen, off 0.28%. The dollar has been rallying for nearly a year but this week was on track for a third consecutive week of losses. (Reuters)

Commodities

Oil Down 2% on Greek Worries, Weaker Products Markets. Crude oil fell about 2% on Friday, the first decline after three days of gains, as worries over the Greek fiscal crisis, weaker oil products prices and pre-weekend profit taking undercut the market. A slowdown in the decline of U.S. oil rigs did not help. Oil services firm Baker Hughes reported an overall drop of four U.S. rigs this week, compared to 7 last week. It also cited new drilling activity in the Permian and Bakken shale basins, a sign that higher crude prices were coaxing producers back to the well pad after a six-month price rout. Brent crude fell $1.24, or 1.9%, to settle down for the first time since Monday at $63.02 a barrel. U.S. crude slipped 84 cents, or 1.4%, to $59.61. For the week, Brent fell 1.3%, and U.S. crude half a percent. (Reuters)

Gold Set for Second Weekly Jump on Fed Rate Outlook, Greece. Gold held near a three-week high on Friday and was set for a second weekly gain, bolstered by the U.S. Federal Reserve's caution on an interest rate rise and worries over Greece, even as a recovering dollar capped gains. Spot gold was up 0.05% at $1,201.50 an ounce by 2:09 EDT (1809 GMT) in choppy, thin trade after notching its biggest daily increase since mid-May on Thursday. Silver was down 0.4% at $16.09 an ounce, while palladium lost 1.9% to $705.25 after hitting a 16-month low. Platinum was up 0.1% at $1,082.24. (Reuters)