Global

G-20 Seals Currency Peace Pact as China Sets Out Bubble Cleanup. Global finance chiefs agreed to avoid getting drawn into currency battles after China set out plans to steer its economy onto a slower path of expansion. G-20 Finance ministers and central bankers pledged Saturday to “refrain from competitive devaluations” after a two-day meeting in Ankara. That’s the first time the G-20 has used such language since 2013. That pact was sealed after China’s central bank governor, Zhou Xiaochuan, explained how his country plans to tame stock market volatility that roiled emerging economies last month just as the U.S. is preparing to raise interest rates. Zhou said he saw no reason for the yuan to decline further in the long run. (Bloomberg)

Malaysia

July Exports Up 3.5% on E&E Gains and Weak Ringgit. Exports extended a rebound for the second month in July with a 3.5% YoY increase in total receipts thanks to a double-digit improvement in the Electrical & Electronic (E&E) category helped by rapid ringgit depreciation. Exports growth bettered the consensus and house estimate for a 3.2% YoY gain. When compared in US dollar terms however, exports remain firmly in negative growth territory. Total trade was up a healthy 4.6% YoY but the trade balance suffered from a surprise increase in imports, in particular consumption and intermediate goods. (See Economic Viewpoint: Malaysia External Trade)

Pause in Decline of Foreign Reserves. Malaysia’s foreign exchange reserves unexpectedly increased by US$0.2b in the 2H of August compared to a fall of US$2.2b in the 1H of August and US$8.8b in the month of July. As at 28th of August, the international reserves held by Bank Negara Malaysia totalled US$94.7b (RM357.7b). The data suggests that large depletion of reserves might have taken a breather, although the latest reversal to the general trend could turn out to be temporary. The current reserves level is sufficient to finance 7.4 months of retained imports and is 1.0 time the short term external debt. (See Economic Viewpoint: BNM Forex Reserves)

Asia

Japan Base Wages Rise Most Since 2005. Japan’s regular wages increased in July by the most in nearly ten years, aiding Prime Minister Shinzo Abe’s efforts to reflate the world’s third-biggest economy. Base pay climbed 0.6% from a year earlier, the biggest increase since November 2005, the labor ministry said on Friday. Overall wages adjusted for inflation rose 0.3%, the first rise in more than two years, after a steep decline in the previous month. For Abe - who is urging businesses to pump more of their cash hoards into wages and investment - the key is for consumers to put the extra money to work in the economy. (Bloomberg)

Indonesia Drops High-Speed Train Plan. Indonesia has dropped its plan to build a high-speed train line and is shifting instead to more economical medium-speed technology, a Cabinet minister said Friday. Coordinating Minister of Economy Darmin Nasution said high-speed service is not suitable for the relatively short distance of 150 kilometers between Jakarta and Bandung, West Java's provincial capital. Nasution said a medium-speed rail system would take only eleven minutes more than a high-speed system to make the trip, while its construction cost would be about 40% cheaper. (AP)

South Korea President Park's Approval Highest in 1.5 Years. South Korean President Park Geun Hye’s approval rating rose to its highest level in a year and a half, giving her a boost to carry out economic reforms at the mid-point of her presidency. Park’s rating rose to 54% this week after reaching a yearly high of 49% last week, Gallup Korea said in an e-mail. Before traveling to Beijing, Park said Tuesday that her government faces its “last chance” for revitalizing the economy and implementing reforms in sectors ranging from finance to labor. (Bloomberg)

Philippines Approves Additional $2.8 Billion of Infrastructure Projects. Philippine President Benigno Aquino approved on Friday the rollout of an additional 130.65 billion pesos ($2.8 billion) of infrastructure projects, including the upgrade of ageing airports and mass railway transport systems. The National Economic Development Authority Board approved four projects. Two of them will be bid out under the public-private partnership (PPP) mechanism, while the rest will be partly funded through loans from multilateral agencies. In the past five years, the government has awarded $4 billion of infrastructure projects to investors. (Reuters)

USA

U.S. Labor Market Shows Some Muscle Despite Slower Job Growth. U.S. job growth slowed in August, but the unemployment rate dropped to a near 7.5-year low and wages accelerated, keeping alive prospects of a Federal Reserve interest rate hike later this month. Nonfarm payrolls increased 173,000 last month after an upwardly revised gain of 245,000 in July, the Labor Department said on Friday. August's gain was the smallest in five months as the factory sector lost the most jobs since July 2013. The jobless rate fell two-tenths of a point to 5.1%, its lowest level since April 2008. (Reuters)

Europe

Swiss Consumer Prices Fall by Most in 56 Years. Swiss consumer prices posted their biggest fall in 56 years in August, the strongest indication yet of the downward pressure on prices from Switzerland's strong currency and low oil prices. Consumer prices fell 1.4% from a year ago, the Federal Statistics Office (FSO) said on Friday, equaling the steepest year-on-year drop since 1959. Prices were 0.2% lower compared with the previous month. The Swiss National Bank's governing board next meets on September 17 to discuss its monetary stance but the latest data are unlikely to affect policy, economists said. (Reuters)

Credit Flow for Growth Curbed by NPLs in Europe – Lagarde. Credit flow needed for investment that would boost mediocre European economic growth is still hampered by unresolved non-performing loans in banks, the head of the International Monetary Fund, Christine Lagarde, said on Friday. Lagarde said despite financial sector reform and sovereign bond buying by the European Central Bank, the flow of credit has yet to pick up enough to facilitate investment. She also stressed the importance of investment in infrastructure. (Reuters)

German Industries Make Economic Case to Welcome Refugees. As thousands of refugees arrive every day in Germany, calls are growing louder from business leaders in Germany to offer them jobs. Beyond the humanitarian imperative to offer protection, businesses are increasingly seeing an economic case to keep the asylum seekers, particularly since Germany's rapidly ageing population and low birth rate are slowly depleting its pool of skilled labour. "If we can integrate them quickly into the jobs market, we'll be helping the refugees, but also helping ourselves as well," the head of the powerful BDI industry federation, Ulrich Grillo, said this week. The employers' federation BDA estimates the country is short of 140,000 engineers, programmers and technicians. (AFP)

Currencies

Dollar Turns Down as Fed Moves Still Uncertain. The dollar eased on Friday as data showing U.S. unemployment in August at its lowest since 2008 did little to clear away currency markets' uncertainty over whether the Federal Reserve will raise interest rates later this month. The dollar index of major currencies traded against the greenback repeatedly fluctuated between gains and losses and last was off 0.13%. The dollar was down 1% against the yen, which was last at 118.90 yen. The dollar was down about 0.25% to $1.1150 against the euro, which benefited from unwinding of euro-funded carry trades. (Reuters)

Commodities

Oil Falls with Wall Street. Crude futures fell about 2% on Friday as traders shrugged off a drop in the number of U.S. rigs drilling for oil and focused instead on a supply glut and declining stock prices on Wall Street. Despite the day's drop, U.S. crude prices notched a second straight weekly gain, helped by gains in the past two sessions. U.S. crude settled down $0.70, or 1.5%, at $46.05. It slid $1.14 to a post-settlement low of $45.61 by 2102 GMT. Brent settled down $1.07, or 2.1%, at $49.61 a barrel. It was down almost 1% on the week. (Reuters)

Gold Falls towards 2nd Weekly Loss after U.S. Payrolls Data. Gold prices fell towards a second weekly loss on Friday after U.S. payrolls data failed to allay uncertainty over the prospect of a near-term interest rate hike from the Federal Reserve. Spot gold was down 0.4% at $1,120.80 an ounce at 1849 GMT, while U.S. gold futures for December delivery settled down 0.3% at $1,121.40. Among other precious metals, silver was down 1.8% at $14.51 an ounce. Platinum was down 1.3% at $987.74 an ounce, while palladium gained 0.8% at $577.50 an ounce. (Reuters)