Malaysia

GDP Growth Dips to 4.9% in 2Q15. Real gross domestic product increased at a YoY rate of 4.9% in 2Q15, slowing from 5.6% in 1Q15 and 6.0% in 2014 but comfortably beating market estimates. Growth was broadly lower across the major sectors of the economy, with the demand side weaker from an export slump and consumers more hesitant to spend. Significantly slower growth had been expected for the quarter, with the market pessimistic on growth prospects after trade data showed plunging exports and surveys returned responses showing consumer sentiment at the weakest since 2008. (See Economic Viewpoint: Malaysia 2Q15 GDP)

Current Account Surplus Narrows to RM7.6 Billion. The current account (CA) surplus narrowed to RM7.6b in 2Q15 from RM10.0b in 1Q15 on a smaller surplus in the goods account and larger deficit in the services account. As a share of GDP, the current account surplus shrank to 2.7% of GDP from 3.6% of GDP in 1Q15. The 1H15 current account share of GDP is 3.1% of GDP. (See Economic Viewpoint: Malaysia 2Q15 Balance of Payments)

BNM Says No to Ringgit Peg, Capital Control. Bank Negara Malaysia (BNM) will not peg the ringgit or introduce capital control to curtail the depreciation of the local currency, Governor Tan Sri Dr Zeti Akhtar Aziz said. She said the current situation does not warrant such measures. Malaysia's economy is solid and the country did not lack access to credit. In the second quarter, net financing grew 8.3%. The central bank governor said during the current economic volatility, a flexible exchange rate regime will help the country to disperse the impact of external developments. (Bernama)

Zeti Will Serve Full Term. Bank Negara Malaysia (BNM) governor Tan Sri Zeti Akhtar Aziz broke her silence today and dismissed speculation that she will be resigning any time soon. She told reporters she intends to see out her five-year term, which ends next year. There has been intense speculation that Zeti has been under pressure to quit due to her and BNM’s part in a task force investigating a money trail linked to 1MDB. Zeti, however, did not say whether her term will be extended. (The Malaysian Insider)

Asia

China Central Bank Says No Reason for Yuan to Fall Further. China's central bank said on Thursday there was no reason for the yuan to fall further given the country's strong economic fundamentals, helping to restore calm to global markets after it devalued the currency earlier in the week. The People's Bank of China (PBOC) said the strong economic environment, sustained trade surplus, sound fiscal position and deep foreign exchange reserves provided "strong support" for the exchange rate. However, poor July economic data and expectations of more interest rate cuts later in the year are likely to fuel expectations that authorities could let it weaken further. (Reuters)

Japan Machinery Orders Rise 2.9% in April to June. Japanese core machinery orders fell 7.9% in June from the previous month, the first drop in four months, the government said Thursday, amid growing caution about the global economy with a slowdown in China and weak commodity prices. The figure compares with a median forecast of a 6.5% decline in an economist survey conducted by The Wall Street Journal and the Nikkei. On a year-on-year basis, core orders rose 16.6%. For the April-June quarter, orders increased 2.9% from the previous three-month period. Machinery orders are widely regarded as a leading indicator of corporate capital investment. (WSJ)

Philippine Central Bank Keeps Rates Steady, Cuts 2015 CPI Forecast. The Philippine central bank held its benchmark interest rate steady for a seventh straight meeting on Thursday, saying it stood ready to act on any threats to inflation and financial stability. As expected, the overnight borrowing rate was kept at 4.0%, where it has been since September 2014. Tetangco said average inflation this year could settle below the official target of 2 to 4%, though it is expected to rise gradually over the policy horizon. This year's inflation forecast was lowered to 1.8% from 2.1%, while the 2016 estimate was maintained at 2.5%. The lower inflation projection this year reflects the impact of slower growth and favorable supply conditions, Tetangco said. (Reuters)

Bank of Korea Holds Rates Steady. South Korea's central bank kept interest rates steady on Thursday, maintaining its view that the struggling economy is on track for recovery, but analysts said growing uncertainties in China could prompt it to cut rates later in the year. The Bank of Korea's monetary policy committee unanimously left the base rate at a record low of 1.50% for a second consecutive month. It cut the rate by a combined 1% between August last year and June this year. China is South Korea's largest trading partner, accounting for more than one-fifth of Korea’s total foreign trade, and the yuan's sharp decline this week had sent the won falling sharply. South Korea's trade-reliant economy recorded its weakest expansion in six years in the second quarter, growing just 0.3%. (Reuters)

USA

US Retail Sales Rise in July. Americans bought more cars, restaurant meals and building supplies in July, as the spending points to steady economic. The Commerce Department said Thursday that retail sales climbed 0.6% last month after a flat reading in June. July's increase suggests that the combination of solid hiring and cheaper gasoline is contributing to rising consumer confidence and spending after a muted start to 2015. Purchases at auto dealers increased 1.4% last month, while restaurants and building materials stores both recorded a 0.7% gain. In the past 12 months, retail sales have risen 2.4%. (AP)

US Jobless Claims Falls to 15-Year Low. More people sought U.S. unemployment aid last week, but the average for the past month fell to the lowest level in 15 years, a sign that few employers are cutting jobs. The Labor Department said Thursday that applications for jobless benefits rose 5,000 to a seasonally adjusted 274,000 last week. Yet the four-week average dropped 1,750 to 266,250, the lowest since April 15, 2000. Economists note that when adjusted for population growth, the current level of applications is likely at all-time lows. The number of Americans receiving aid rose 15,000 to 2.27 million. That figure has fallen 10.7% in the past 12 months. (AP)

U.S. Import Prices Fall. U.S. import prices in July posted their biggest decline in six months as the cost of petroleum products and other goods fell, suggesting inflation could remain tame for a while. The Labor Department said on Thursday import prices dropped 0.9% last month, the largest fall since January. Import prices have now declined in 11 of the last 13 months. In the 12 months through July, prices dropped 10.4%. Last month, imported petroleum prices fell 5.9% after rising 1.6% in June. The report showed export prices slipped 0.2% last month after falling 0.3% in June. Export prices dropped 6.1% in the 12 months through July. (Reuters)

Strong U.S. Inventories Signal Upward Revision to Second-Quarter Growth. U.S. business inventories in June posted their largest gain in 2.5 years as sales rose marginally, the latest sign that second-quarter economic growth could be revised higher. The Commerce Department said on Thursday that business inventories increased 0.8%, the biggest gain since January 2013, after an unrevised 0.3% rise in May. Economists polled by Reuters had forecast inventories rising only 0.3% in June. Retail inventories excluding autos, , jumped 0.7% in June, the largest rise since November 2013. (Reuters)

Europe

Greek Economy Unexpectedly Surged. Greece’s economy grew in the second quarter in a surprise surge just before the standoff between the government and its creditors forced officials to impose capital controls. The Hellenic Statistical Authority in Athens said Thursday GDP rose 0.8%, as it revised up the first quarter to show stagnation. Nominal GDP fell 0.7% in the period through June. Economists in a survey forecast a 0.5% contraction. (Bloomberg)

Currencies

Currency War Fears Ease; Dollar Rebounds. The dollar, which had suffered as investors pared back bets that the Federal Reserve's long-awaited interest rate hike would come as early as its Sept. 16-17 meeting, rebounded on Thursday. The dollar index was up 0.1% at 96.373, rebounding from a one-month low of 95.926 hit on Wednesday. U.S. retail sales rebounded in July, suggesting solid momentum in the economy. The euro was little changed at $1.1155 after scaling a one-month peak of $1.1215 on Wednesday, helped by the unwinding of euro-funded carry trades in the yuan and other emerging market currencies. (Reuters)

Commodities

U.S. Oil Slides to 6.5-Year Low. U.S. oil prices tumbled more than 3% to a 6.5-year low under $42 a barrel on Thursday as data showing a big rise in key U.S. stockpiles. A rise in the dollar and strengthening employment data, added to the weight on oil. Oil has fallen by nearly a third since late June, a decline that continued this week after a spate of refinery outages sapped demand for crude. U.S. crude settled down $1.07 at $42.23 a barrel, after setting a session bottom at $41.91, its lowest since March 2009. Brent settled down 44 cents, or almost 1%, at $49.2. (Reuters)

Gold Falls as U.S. Data Boosts Dollar, China Fears Ease. Gold fell 1% on Thursday, snapping five sessions of gains, as the dollar strengthened on the back of upbeat U.S. data and concerns eased over further losses in the yuan after the devaluation of the currency by China. Spot gold was down 1% at $1,114.26 an ounce at 1853 GMT, while U.S. gold futures for December delivery settled down 0.7% at $1,115.60 an ounce. Gold demand hit a six-year low in the second quarter, a World Gold Council report showed. Spot palladium was down 1.7% at $612.50 an ounce after hitting a two-week high of $627 earlier. Platinum was down 1% at $987 an ounce and silver was down 0.7% at $15.37 an ounce. (Reuters)