MALAYSIA: Country Wrap: Malaysia Seeks Clarity on CHIPS Tariffs
- Malaysia projects 104 billion ringgit ($24.6 billion) in approved investments for the manufacturing and services sectors in 2025, according to Investment, Trade and Industry Minister. The forecast takes into account the gross domestic product projection, projects under evaluation and potential projects, he said in a parliamentary written reply on Wednesday. The government expects trade performance to experience a slight decline in the second half of 2025 on account of lower demand from the US due to tariffs. A more significant impact is expected to be felt in the first quarter of 2026 (source BBG)
- Malaysia has reached out to the US to seek an explanation on the 100% tariffs President Donald Trump said he would impose on some semiconductor imports, according to Investment, Trade and Industry Minister. The ministry is in regular communication with the US Trade Representative and Department of Commerce, he said in Parliament on Thursday. The tariff would have a big impact on exporting countries such as Malaysia. For now, Malaysia’s semiconductors are exempted from tariffs, but this is subject to review and current policy developments in the US. (source BBG)
- The FTSE Malay KLCI is up +0.24% for a third successive day of modest gains.
- With regional peers delivering strong gains today, the ringgit has struggled and is down -0.01% at 4.2275, yet remains almost 1% better over the last five trading days. The ringgit has traded in a tight range of 4.2365 - 4.2210 in recent days as it looks for a catalyst for it's next move.
- There is a sizeable bond auction today of MYR2.5bn with a 2044 maturity and is the likely source of the move higher for the 10 year yield which is up +2bps at 3.42%
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STIR: RBA Dated OIS Shunts Firmer After Surprise RBA Decision
RBA-dated OIS pricing is 11-23bps firmer across meetings after the RBA surprised the market by leaving the cash rate at 3.85%. A 25bp rate cut today was given a 92% probability by the market ahead of the decision.
- A cumulative 62bps of easing is priced by year-end (based on an effective cash rate of 3.84%) versus 75bps pre-RBA.
Figure 1: RBA-Dated OIS – Post-RBA Vs. Pre-RBA
Source: Bloomberg Finance LP / MNI
FOREX: Asia FX Wrap - The USD Drifting Lower
The BBDXY has had a range of 1193.81 - 1196.62 in the Asia-Pac session, it is currently trading around 1194. The USD has drifted lower in a quiet Asia-Pac session, -0.18%, giving back a little of its overnight gains. “Asian equities are holding up in the face of tariff angst as markets appear to be leaning into a familiar playbook: President Trump blusters, then backpedals. Many of the early jitters have faded, replaced by hopes of flexibility. Traders are latching onto signs that the Aug. 1 deadline may not be set in stone and that the White House remains open to negotiation. A proposed 10% tariff deal with the EU is also feeding that optimism." BBG
- EUR/USD - Asian range 1.1709 - 1.1749, Asia is currently trading 1.1745. The pair got a nice bounce on the news of a proposed deal with the US. The price is starting to look a little stretched in the short term and is vulnerable to any correction in the USD, first support is back towards 1.1600.
- GBP/USD - Asian range 1.3599 - 1.3639, Asia is currently dealing around 1.3635. Strong demand was again seen below 1.3600 helping the support to hold. A sustained move sub 1.3550 needed to signal a deeper correction.
- USD/CNH - Asian range 7.1706 - 7.1796, the USD/CNY fix printed 7.1534, Asia is currently dealing around 7.1720. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
- Cross asset : SPX +0.01%, Gold $3331, US 10-Year 4.39%, BBDXY 1194, Crude oil $67.52
Data/Events : France Trade Balance, Germany Trade Balance
Fig 1: GBP/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
EURUSD TECHS: Trend Signals Remain Bullish
- RES 4: 1.1967 2.0% 10-dma envelope
- RES 3: 1.1923 2.000 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1851 High Sep 10 2021
- RES 1: 1.1829 High Jul 01
- PRICE: 1.1745 @ 06:04 BST Jul 8
- SUP 1: 1.1687 Low Jul7
- SUP 2: 1.1637 20-day EMA
- SUP 3: 1.1590 Low Jun 25
- SUP 4: 1.1458 50-day EMA
The trend condition in EURUSD is unchanged, signals remain bullish and the latest pullback appears corrective. MA studies are in a bull-mode position, this continues to highlight a dominant medium-term uptrend. Note that corrections have been shallow. This also reinforces the trend condition. A resumption of gains would signal scope for a climb to 1.1851, the Sep 10 2021 high. Key short-term support to watch lies at 1.1637, the 20-day EMA.
