Market Update - 3 July 2013

• Wall Street fell despite the higher than expected US factory orders, as political turmoil in Egypt and overnight tightening of US bank regulations may continue to depress sentiments. The Dow -0.28%, S&P -0.05% and Nasdaq -0.03%. 

• The US dollar rose to its strongest in a month versus the Japanese yen before a report forecast to show companies in the US added more jobs in June, signaling a strengthening labor market that may prompt a scale back of monetary easing 

• Fresh cues of the Federal Reserve’s QE tapering may be inferred from Vice Chairman Dudley’s comment that “a strong case can be made that… growth will pick up notably in 2014”, suggesting that the sustenance of a recovery may provide further impetus for a bond purchase reduction. 

• RBA yesterday kept the cash rate target unchanged at 2.75%. RBA Governor Glenn Stevens said in a statement that the Aussie dollar “remains at a high level” and “it is possible that the exchange rate will depreciate further over time, which could help to foster a rebalancing growth in the economy”. 

• A lackluster session led to the KLCI inching lower on Tuesday, closing the day circa the 1770 mark. As noted previously, a failure to break through the 1790-1800 resistance indicates that there is no strong conviction of any strong move upwards for now. 

• USD/MYR looks supported for now and may test the 3.2000 mark once again as the USD/JPY hits the 100.00 mark for the first time in a month. Today’s expected trading range is 3.1750 – 3.2000