Market Update - 31 July 2013

• US stocks were mostly higher yesterday, with the Dow and S&P flat, while Nasdaq gained 0.5%, as investors stayed on the sidelines ahead of the FOMC rate decision tonight. Sentiments may have also been dragged by the surprising lower-than-expected US consumer confidence for July. 

• The US dollar held gains amid speculation that the Federal Reserve will give further clues to the timing of reductions in stimulus tonight. 

• RBA Governor Stevens’ hint on possible further policy easing given 2Q13 inflation data, which subsequently sent AUD/USD to 0.9044 (-1.7%) on intraday trading yesterday. 

• KLCI came under pressure on Tuesday, staying below the 1800 psychological mark. Selling pressure may sustain intra-day, following Fitch’s revision of its outlook on Malaysian sovereign credit rating from stable to negative, citing weak public finances. 

• The USD/MYR pushed higher above 3.2400 its highest level since mid-2010, partly due to Fitch’s revision of Malaysia’s outlook which had led to further weakening of the MYR. Expect a narrow trading range for today, 3.2400 – 3.2500. 

• Meanwhile, the SGD/MYR has also inched above the 2.5500 psychological level.