INSIDE MALAYSIA: Ringgit Steady; Citi Likes Currency on Inflows 21 Jan 2013

 * Ringgit little changed at 3.0140 per dollar; pivot point at 3.0131; support at 3.0194, 3.0258, 3.0385; resistance at 3.0067, 3.0004, 2.9877.

  * Dollar's 14-day RSI is at 32, approaching oversold levels

  * Citigroup constructive on outlook for ringgit on back of improved outlook for capital flows, trade balance and FDI; rates will be range-bound this year as central bank may stay on hold for time being and consider stronger currency over other monetary-policy tools to curb any rise in inflationary
pressures

  * 12-month forwards drop 0.1% to 3.0686 per dollar

  * 1-month implied volatility falls 5 bps to 5.0215%

  * 1-year IRS retreats to 3.2050% from 3.2100% on Jan. 18; 5- year IRS unchanged at 3.5100%

  * Yield on 3.418% sovereign bonds due August 2022 had second weekly decline last week, dropping 2 bps to 3.467%

  * Bank Negara to sell 1b ringgit of 210-day notes, 1.5b ringgit of 126-day Islamic notes, 1.5b ringgit of 210-day notes and 2b ringgit of 63-day Islamic notes today

Malaysia Palm Oil SGS Data 1-20 Jan 2013

SGS (1-20 Jan) = 813778 v 1015440(do​wn 19.86%)

Malaysia Palm Oil SGS Data 1-15 Jan 2013

SGS (1-15 Jan) = 571481 v 734571(dow​n 22.2%)

Market Update - 15 Jan 2013

• Very quiet in the US as the market waits to digest quarterly earnings which start in earnest this week, the S&P is down 0.1% and the Dow up 0.2%. Apple is down 3% after reports of reduced orders.

• USDMYR took a dive this morning as there are talks to hedge funds selling the pair, and pushing it to 3.1000, support at 3.0000 seems to be the target. SGDMYR also pressured down to 2.4500 and the SGDMYR pair is adding to MYR strength.

• Industrial production data out of Europe overnight showed no signs of an end to the economic slump. In Spain output fell 2.5% in November alone and is collapsing at an annualised pace of 7.2%, in Italy MoM output fell 1% for an annualised rate of -7.6%. German grew 0.1% MoM but the annual rate is still a dismal -3%.

• The Shanghai Composite Index closed yesterday 3% higher and at the highest level since June ahead of GDP data due Friday. Oil rose 0.6% while copper fell 0.3%.

• Stocks in Europe started ok on the strong China session but gave up gains after the IP data, with most bourses falling on the continent and the Eurostoxx down 0.1%. Peripheral spreads widened slightly as safe haven bonds were bid, UST’s -1bp to 1.76% gilts -4.6bps to 2.03% and bunds -3.2bps to 1.55%.

• The Euro is higher at 1.3380 vs the greenback after testing 1.34 and is really starting to move vs the CHF:::

• David Cameron has been forced to bring forward his speech on EU membership due to a Franco-German anniversary next week. The speech will take place on Friday where he will lay out his vision for a referendum and renegotiation of the country’s relationship with the EU.

• Lockhart (FOMC, mild dove non-voting) stated that even though he has supported open ended bond purchases he acknowledges legitimate concerns about the long term consequences of the Fed’s balance sheet. Williams said the Fed will need to keep buying assets well into second half of 2013, predicts unemployment to be at 7.0% or higher through end of 2014.

Malaysia Palm Oil ITS Data 1-15 Jan 2013

ITS (1-15 Jan) = 570510 v 719817 (down 20.75%)

Malaysia Palm Oil SGS Data 1-10 Jan 2013

SGS (1-10 Jan) = 343081 v 516841(dow​n 33.62%)

Malaysia Palm Oil ITS Data 1-10 Jan 2013

ITS (1-10 Jan) = 373462 v 499732 (dow​n 25.27%)