Market Update - 11 April 2013

· Most by now would know that the elections are called and it will be 5^th May 2013, finally……USDMYR traded higher shortly after the announcement.

· USDMYR now it seems the way market is reading it is different, if BN loses its good for the long term and change for the country while if they win it’s also good since we have some short term stability. So that means, either way it’s good for Malaysia? Personally I am not sure how to read this pair at the moment but one thing is for sure, market is looking to sell on rallies and we could see further downside for this pair. Range for today remains at 3.0000-3.0500.

· Bernanke’s likely to leave the latest FOMC statement similar to the last one with QE still in tact and the equity markets responded accordingly; the S&P storming to a new all time record high, up 1.22% to 1587.33 in its best day for months. Treasuries were sold down consistently, yield rising 5.3bps to 1.8% on the benchmark 10yr.

· European markets were also joining the risk on mood yesterday, the Eurostoxx added 2.5% with peripheral stock markets surging (Italy +3.35%, Spain +3.35%).

· The German Economic Ministry released a bullish report on the domestic economy, seeing upside in labour, retail sales & industrial orders."Expectations of a recovery after the winter half of the year were based up to now on a slight improvement in the global economy and stronger sentiment indicators. Now however signs of a pickup in industrial orders, a key area for growth, are supporting this expectation,"

· USDJPY continue to trade higher but 100 proving to be a big psychological resistance at the moment. Yen strengthened 50pts briefly on the below headlines but it was soon back down, this morning we’re at 99.78 around fresh 5 year highs and down 75pts on the night.

· Mr Kuroda once again said BOJ is doing all it can at the moment and it will ensure the 2% inflation target will be their target and it will be achieved, expect more USDJPY move up.

· Goldman Sachs has called gold a SELL as Cyprus declared it would sell $400 million of its gold reserves, the metal slumped 1.7% or $27 to $1558.

· Barack Obama tabled his latest budget proposal, which John Boehner said he deserved “some credit” for, but also labelled the new offering as “incremental”, while Senate minority leader McConnell said it was “not a serious plan” . He’s conceded on linking social security to the less generous chained CPI, which is symbolic and will enrage the Democrats but it’s a step in the right direction, but is trying to soak hedge funds and the rich with higher CTG. The proposal would have the deficit down to 1.7% by 2013, short of the small surplus the Republicans plan would manage.