Malaysia

Malaysia Plans More Subsidy Cuts. Malaysia plans to cut more subsidies and move billions of dollars in government employee housing loans off its balance sheets to bolster its fiscal position, even as a growing scandal threatens Prime Minister Najib Razak’s ability to implement potentially unpopular policies. The government will gradually remove subsidies from petrol, liquefied petroleum gas and cooking oil in coming years, Mohd Irwan Serigar Abdullah, secretary general of Treasury, said in an interview late Monday. A Fitch Ratings decision to pull back from downgrading Malaysia is giving the country space to reinforce its fiscal credentials, he said. (Bloomberg)

Pay Cuts for Civil Servants with Unsettled Loans. Starting September, 163,000 civil servants who have not fully paid back thier National Higher Education Fund Corporation (PTPTN) loans will be subjected to a mandatory salary deduction to settle their outstanding payments. Public Service Department (PSD) director-general Tan Sri Mohamad Zabidi Zainal assured that the salary deduction would not burden the civil servants as the department had notified PTPTN to consider their financial commitments and come up with an agreeable amount to the borrowers. (New Straits Times)

1MDB Special Task Force Freezes 6 Bank Accounts. The special task force investigating the alleged transfer of billions of ringgit into the personal accounts of the prime minister has frozen six bank accounts in their probe so far. Attorney-General Tan Sri Abdul Gani Patail, Bank Negara governor Tan Sri Zeti Akhtar Aziz, Inspector General of Police Tan Sri Khalid Abu Bakar and MACC chief commissioner Tan Sri Abu Kassim Mohamed said in a joint statement that the taskforce also seized documents linked to 17 bank accounts at two banks for further investigation. The task force said the freeze and seizures were related to the non-compliance of Bank Negara’s rules by the said banks. (The Malaysian Insider)

International Reserves of Bank Negara as at end-June. The international reserves of Bank Negara Malaysia amounted to RM398.1 billion (equivalent to USD105.5 billion) as at 30 June 2015. The reserves level has taken into account the quarterly adjustment for foreign exchange revaluation changes. The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times the short-term external debt. At end-May, international reserves were valued at RM394.3 billion. (BNM)

Asia

RBA Holds Rate as Greek Drama Drives Aussie Below 75 Cents. Australia left its key interest rate unchanged after Greece’s drama drove the currency below 75 U.S. cents and Sydney’s property bubble argued against a further cut. Central bank Governor Glenn Stevens kept the cash rate at a record-low 2% Tuesday as predicted by markets and economists, and after cuts in May and February. He identified 75 cents in December as a level that would help the economy. (Bloomberg)

Taiwan's June Export Slump Darkens Outlook for Tech Demand. Taiwan's exports shrank the most in more than two years in June as demand for its signature technology goods and from China fell sharply, threatening to erode the island's economic outlook. The bigger-than-expected slump was the fifth straight month of decline with shipments dropping to its key markets in the United States, Europe and China. Exports in June fell 13.9% from a year earlier, the worst fall since February 2013 when they slid 15.8%, and more than double the 6.0% decline projected in a poll. (Reuters)

Chinese Trading Suspensions Freeze $1.4 Trillion of Shares amid Rout. Chinese companies began to suspend trading of its own shares in a bid to prevent investors from selling them. Almost 200 stocks halted trading after the close on Monday, bringing the total number of suspensions to 745, or 26% of listed firms on mainland exchanges. Most of the halts are by companies listed in Shenzhen, which is dominated by smaller businesses. The suspensions have locked up $1.4 trillion of shares, or 21% of China’s market capitalization, and are becoming increasingly popular as equity prices tumble. (Bloomberg)

Jakarta Says No Plans for More Tax as Collection Disappoints. Indonesia's government will not introduce new taxes or raise existing ones this year in order to achieve its revenue collection target, a finance ministry official said on Tuesday, raising prospects of a wider fiscal deficit unless spending is cut. President Joko Widodo's administration is banking on a 30% improvement in revenue collection to help pay for a long list of infrastructure projects. But in the first half of this year, the government collected only 37% of its full year tax revenue target of 1,489.3 trillion rupiah ($112.10 billion) Last week, Finance Minister Bambang Brodjonegoro said the 2015 fiscal deficit might be 2.23% of GDP instead of the 1.9% in the revised budget. (Reuters)

Philippine Central Bank Says Upside Risks to Inflation Warrants Care. The Philippine central bank chief said on Tuesday upside risks to the inflation outlook from financial market volatility and El Nino "necessitates care" in setting monetary policy over future meetings. Data earlier in the day showed the consumer price index rose 1.2% in June from a year ago, below the 1.5% rise predicted by analysts, and the lowest rate since 1994. The central bank kept its benchmark interest rate steady for a sixth consecutive meeting at its June review. (Reuters)

USA

Trade Deficit Widens in May as Exports Struggle. The U.S. trade deficit widened slightly in May, reflecting declines in sales of American-made aircraft and machinery as exports continued to suffer from a strong dollar. The deficit increased 2.9% to $41.9 billion in May, up from an April imbalance of $40.7 billion, the Commerce Department reported Tuesday. Imports fell 0.1% to $230.5 billion. Exports slid at a faster pace of 0.8% to $188.6 billion. American producers have been hurt this year by a rising value of the dollar, which makes U.S. goods less competitive in overseas markets. (AP)

Job Openings Stay High, but Actual Hiring Falters in May. Job openings stayed close to a 15-year high in May. It's a sign that companies are expecting continued economic growth, but the level of advertised jobs hasn't driven the same kind of increase in actual hiring. The Labor Department said Tuesday that the number of open jobs rose 0.5% to 5.36 million in May. April's total was revised down to 5.33 million from 5.38 million, which had been the highest total during the 15 years that the government has tracked the data. The number of new hires slipped somewhat in May for the second straight month, while the number of workers who chose to leave their jobs - a sign of strength since quits are generally associated with people finding better jobs - was basically unchanged. (AP)

Europe

German Industrial Output Unchanged. German industrial production held steady in May, in a sign the economy is withstanding threats to confidence from the crisis in Greece. Output was flat after a revised 0.6% increase in April the Economy Ministry in Berlin said on Tuesday. The reading compares with the median estimate of economists for a 0.1% gain. Output climbed 2.1% from a year earlier. Consumer-goods production expanded by 1.3% from April, while manufacturing output grew 0.4% and production of investment goods increased by 0.4%, the report showed. (Bloomberg)

UK's NIESR Estimates Economy Grew 0.7% in Q2. Britain's economy picked up speed in the second quarter after a slow start to the year, forecasters at the National Institute for Economic and Social Research said on Tuesday. NIESR said it estimated that gross domestic product in the three months to June was 0.7% higher than in the previous three-month period, up from 0.6% in the three months to May. In annual terms, growth was 2.7%, it said. Data earlier on Tuesday showed stronger-than-expected industrial output for May, thanks in large part to oil and gas production, but manufacturing output fell in the month. (Reuters)

Greece Faces Last Chance to Stay in Europe as Cash Runs Out. Greece faces a last chance to stay in the euro zone on Tuesday when Prime Minister Alexis Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. With Greek banks rapidly running out of cash and the European Central Bank slowly tightening the noose on their funding, Tsipras must persuade the bloc's other 18 leaders, many of whom are exasperated after five years of Greek crisis, to open rapid negotiations for a major new loan to rescue his country. The leaders of Germany and France, the currency area's two main powers, said after conferring on Monday that the door was still open to a deal to save Greece from plunging into economic turmoil and ditching the euro. (Reuters)

Currencies

Euro Slides to Five-Week Low vs Dollar. The euro dropped to a five-week low against a buoyant U.S. dollar on Tuesday, after the European Central Bank left emergency liquidity aid for Greek banks at current levels but increased the haircuts on the collateral it demands. Against the dollar, the euro fell 1.2% to $1.0925, after sliding to a five-week low of $1.0917, while the dollar index rose 0.9% to 97.154, after earlier hitting a one-month high. The euro was last down 1.4% versus the yen to 134 yen, after earlier dropping to a five-year trough. (Reuters)

Won Leads Asia Forex Slide. South Korea's won slumped to near four-month lows on Tuesday, leading losses among emerging Asian currencies as risk sentiment was hit by volatile Chinese stocks and caution ahead of a euro zone summit to ease Greece's debt crisis. The won lost as much as 0.5% to 1,131.7 per dollar, its weakest since March 17. Offshore funds unloaded the currency as Seoul shares touched a near three-week low on foreign selling. (Reuters)

Commodity Currencies at Multi-Year Lows. Commodity currencies fell sharply on Tuesday as Chinese stock markets went into a tailspin. The Australian dollar, which is a proxy for Chinese investments, fell more than 1% to US$0.7414, with a drop in iron ore prices also weighing, traders said. The New Zealand dollar plunged as well, falling to a five-year low against the greenback. It was last down 0.9% at US$0.6627. The Canadian dollar, meanwhile, hit a three-month low of C$1.2732 against its U.S. counterpart. (Reuters)

Commodities

U.S. Crude Slump Cools, Market Awaits Inventory Data. U.S. crude oil futures steadied on Tuesday after falling sharply a day earlier on worries about Greece's indebtedness and China's stock market losses, although charts indicated renewed selling could push prices into bear market territory. U.S. crude settled down 20 cents at $51.98 a barrel, a three-month low, and extending to more than 8% its drop since Thursday's close. Brent settled up 31 cents at $56.85. (Reuters)

Gold Near 4-month Low on Strong Dollar, Silver Sinks 6.9%. Gold fell to a near four-month low on Tuesday, while silver sank nearly 7% and platinum dropped to a 2009 low, as the dollar rallied ahead of an emergency euro zone summit on Greece. Spot gold dropped to its lowest since March 18 at $1,148.05 an ounce and was down 1.1% at $1,156.75 by 1945 GMT. Gold weakness and dollar strength also hit the rest of the precious metals complex, with silver down 6.9% to $14.65 an ounce, its lowest since Dec. 1, 2014. Palladium fell 5.6% a two-year lo