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   UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest inflation figures in the Malaysian economy. Key Takeaways “Headline inflation breached the 3% level for the first time this year at 3.4% y/y in Jun (from 2.8% in May). It came in higher than ours and Bloomberg consensus of 3.2%. Price pressures broadened with more consumer price index (CPI) components recording larger price increases last month compared to the preceding month, led by food and transport components.” “We expect CPI growth to jump above 4.0% in 2H22 after averaging 2.5% in 1H22. Our 2H22 inflation  outlook  largely rests on high commodity prices, year-ago low base effects, persistent currency weakness, changes in some staple food prices (i.e. chicken, eggs and cooking oil), and recovering domestic demand. The new targeted fuel subsidy mechanism, which is currently under pilot testing, will pose upside risks to our inflation outlook should it be implemented over the ...

  GBP/USD jumped to a fresh multi-week high amid the emergence of fresh USD selling. A positive intraday turnaround in the risk sentiment weighed on the safe-haven buck. Brexit woes might cap gains for the British pound ahead of the crucial FOMC decision. The GBP/USD pair attracted some dip-buying near the 1.1960 area on Monday and shot to a nearly three-week peak during the mid-European session. The pair was last seen trading around the 1.2065-1.2070 region, up over 0.50% for the day. Friday's better-than-expected flash UK PMI prints reaffirmed market bets for a 50 bps rate hike by the Bank of England in August and continued acting as a tailwind for the British pound. On the other hand, a positive turnaround in the global risk sentiment - as depicted by a strong intraday rally in the equity markets - weighed on the safe-haven US dollar. In fact, the USD Index languished near its lowest level since July 5 touched on Friday, which, in turn, was seen as another factor...

  The index posts decent gains beyond the 107.00 mark. US yields extend the decline across the curve on Friday. Flash Manufacturing/Services PMIs next on tap in the docket. The greenback, in terms of the  US Dollar Index (DXY) , leaves behind Thursday’s pullback and regains the area beyond 107.00 the figure at the end of the week. US Dollar Index now looks to data, FOMC The index extends the erratic performance so far this week and advances north of the 107.00 yardstick, as market participants seen to have already digested the start of the hiking cycle by the ECB on Thursday. Contrasting with the upbeat tone in the buck, yields in the US cash markets continue their march south and already navigate in multi-session lows across the curve ahead of the key FOMC event due on July 27. In the NA session, the advanced Manufacturing and Services PMIs for the month of July will be the only releases of note later in the NA session. What to look for around USD The index looks si...

  Gold price witnesses selling for the second straight day and drops to a nearly one-year low. The prospects for a further rise in interest rates continues to drive flows away from the metal. A positive risk tone exerts additional pressure; modest USD weakness fails to lend support. Gold price  is extending the overnight breakdown-momentum below the $1,700 mark and is continuing to lose ground for the second successive day on Thursday. The downward trajectory is draging the XAUUSD to its lowest level since August 2021, around the $1,689-$1,688 region during the early European session. Gold price weighed down by hawkish central banks The prospects for more  interest rate hikes by major central banks  is becoming a key factor contributing to driving flows away from the non-yielding gold. The European Central Bank is all set to raise interest rates for the first time since 2011 on Thursday. A Reuters report indicate...

  Canada CPI Overview Statistics Canada will release the latest consumer inflation figures for June later during the early North American session on Wednesday, at 12:30 GMT. The headline CPI is expected to ease from 1.4% in May to 0.9% during the reported month. The yearly rate, however, is anticipated to surge to its highest level since 1982 and come in at 8.4% in June, up from 7.7% in the previous month. More importantly, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, is estimated to rise 0.5% MoM in June and accelerate to 6.7% on a yearly basis from the 6.1% in May. According to analysts at RBC Economics: “This continued acceleration was likely largely driven by higher food and energy prices – both of which have been boosted by global pressures. Oil prices rose another 4.8% from May and consumer food prices have been surging in part due to higher commodity prices and acute supply chain disruptions. Roughly half of inflation recently has been drive...

  Previewing the Bank of Japan's (BoJ) upcoming policy meeting, Rabobank analysts said that they expect the BoJ to revise up its inflation forecasts and lower its growth expectations. We see USD/JPY returning to the 130 area in Q2 next year "If  USD/JPY  were to spike to 145 or beyond, the inflationary impact of the BoJ’s easy policy would become greater and market speculation that the BoJ may capitulate on its YCC policy would likely increase."

 The euro firmed to a one-week high on Monday, benefiting from the dollar's retreat after several Federal Reserve officials signaled they did not favour stepping up the rate hiking pace. The comments late last week knocked the dollar off two-decade highs and boosted global stocks and non-dollar currencies, especially the euro. The mood was also broadly helped by stimulus support signals from China. The greenback index, measuring its rate against six global currencies, is now almost 2% off last week's peak and by 1030 GMT , stood 0.5% lower at 107.27. The euro, the main component in that index, firmed 0.7% at $1.016, having plunged last week below parity to the dollar. "With equity markets still in positive territory, risk appetite is back so the comments from Fed governor (Christopher) Waller, ramming back on the 100 bps rise, have had the desired impact," said Derek Halpenny, head of research at MUFG. Waller and St Louis Fed governor James Bullard said they preferre...