Monthly FX+Rates Strategy

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USD Stays Weak As FED Sticks To Its “Inflation Is Transitory” Lullaby

Monthly FX+Rates Strategy

Monday, 31 May 2021

Heng Koon How, CAIA Head of Markets Strategy

[email protected] Peter Chia Senior FX Strategist [email protected] Victor Yong Rates Strategist [email protected] Quek Ser Leang

Markets Strategist

[email protected] Global Economics & Markets Research

Email: [email protected]

URL:www.uob.com.sg/research

As the US Federal Reserve (FED) stayed patient and non-committal about potential tapering or rate hikes, other Developed Market (DM) central banks have gone ahead with normalizing monetary policy. Bank of Iceland has made its first rate hike in May while Norway’s Norges bank signaled its first hike in 2H this year. In addition, Bank of Canada and Reserve Bank of New Zealand both signaled rate hikes in 2022.

As a result of this monetary policy contrast, the USD continued to stay weak. We maintain our view of gradual USD weakness. In view of further recovery and reopening of European economies, we raise our forecast for both the EUR/USD and GBP/USD further, lifting their 1Q22 forecasts to 1.45 (from 1.42) and 1.25 (from 1.23) respectively.

In Asia, we note that the renewed COVID-19 outbreak in various economies may well delay their growth recovery and put their respective currencies at risk. However, the CNY’s strength remains underpinned by China’s strong and stable growth recovery. As such, we lower USD/CNY forecasts further to 6.30 by 1Q22 (from 6.40 previously).

In the rates space, it has been a largely nondescript month for US and SG rates. Outlier moves have been absent and monetary policy expectations are unchanged. Given the ongoing drift lower in money market rates, we lower our 3M USD Libor forecast marginally to 0.20% by 4Q21.

As for longer dated yield, we maintain our year end forecast of 10-year US Treasuries yield at 2.0%. Resurgent COVID-19 infections in Asia will pass, as such, upside risk for local yields remains at play.

DM Central Banks Start Monetary Policy Normalization

Towards the end of May, there is an increasingly noticeable divergence in monetary policy bias between the US Federal Reserve (FED) and the rest of the Developed Market (DM) space. On one hand, the FED continues to sing its lullaby that the current push in prices higher is transitory. The on-going lullaby has indeed prepared financial markets for the pop in US headline CPI to 4.2% and US headline PPI to 6.2%, both for the month of April.

While the FED remained patient, the same cannot be said about the other central banks in the Developed Market (DM) space. In mid-May, the Central Bank of Iceland, became the first central bank in Western Europe to normalize monetary policy, with a 25 bps hike to its 7-day term deposit rate to 1%, warning that “inflationary pressures appear to be widespread” and citing “steep rise in wages and house prices” as factors that led to its decision to hike its benchmark rate.

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USD Stays Weak As FED Sticks To Its “Inflation Is Transitory” Lullaby

Monday, 31 May 2021 2 I P a g e

And in early May, Norway’s Norges Bank also announced that it plans to hike rates as early as “the latter half of 2021”, potentially making it the first amongst the G10 nations to hike rates. Another leader in the DM space in terms of monetary policy normalization is the Bank of Canada (BoC). Not only has the BoC signaled that it will hike rates in late 2022, the BoC has already started to shrink its balance sheet, dropping it by about CAD 100 bn, from its peak of about CAD 580 bn in March to the current level of CAD 480 bn.

Not to be left behind, the Reserve Bank of New Zealand (RBNZ), which traditionally has been the leader to shift its monetary policy setting has also projected the start of a 25 bps hike to its cash rate by Sep 2022. The RBNZ’s projection sees cash rate eventually rising to as high as 1.5% by end of 2023. While leaving the cap of its asset purchase program unchanged at NZD 100 bn, the RBNZ has stealthily calibrated its weekly asset purchase amounts lower.

Bank of England (BoE) Monetary Policy Committee (MPC) member Gertjan Vlieghe also thrust the BoE into the normalization camp with his latest comment hinting too of a possible rate hike in late 2022. As a result, the GBP 3M OIS climbed further above the 10 bps level. Last year’s concern of possible negative rates for the UK is now but a distant memory.

Chart 1: Central Bank of Iceland Has Started To Hike Its Benchmark Rate

Source: Bloomberg, UOB Global Economics & Markets Research

0 1 2 3 4 5 6 7

May 16 Nov 16 May 17 Nov 17 May 18 Nov 18 May 19 Nov 19 May 20 Nov 20 May 21 Bank of Iceland 7 Day Term Deposit Rate (%)

Chart 2: Bank of Canada Has Started To Shrink Its Balance Sheet

0 100 200 300 400 500 600 700

Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Bank of Canada Balance Sheet (CAD bn)

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Outside of the DM space, the People’s Bank of China (PBoC) may have already started to tighten liquidity as well. While the PBoC continued to keep its benchmark 1-year Loan Prime Rate (LPR) unchanged at 3.85%, it has clearly started to guide both the M1 and M2 money supply growth rates back down to pre-COVID outbreak levels of late 2019.

As a result, the FED’s patient lullaby that “inflation is transitory” is increasingly at odds with the more hawkish tones by the above mentioned central banks which have either started to normalize monetary policy or at least start to engage in the rate hike debate for next year. This contrast is now increasingly weighing down on the USD, resulting in the USD Index (DXY)’s current test of the downside below the critical 90 support level.

In the longer end of the rates space, the FED’s patience has contributed to some temporary consolidation in the 10-year US Treasuries yield around the 1.60% level. For now, it would appear that aggressive inflation expectations have priced in the recent pop in US inflation indicators. However, action of a different sort is brewing in the shorter end of the rates space. As a result of on-going cash glut, the 3M US Libor continued to dip lower to 0.13%, while the overnight SOFR rate has been pinned down at just 1 bps since March. This presents a different type of challenge to the FED altogether as it strives to stabilize short term money market rates.

Chart 3: Gone Are The Worries Of Negative Rates As GBP OIS Rebound

-0.4 -0.2 0 0.2 0.4 0.6 0.8

May 19 Aug 19 Nov 19 Feb 20 May 20 Aug 20 Nov 20 Feb 21 GBP OIS (%) BoE Rate (%)

Chart 4: PBoC Has Guided Both China’s M1 And M2 Growth Rate Back To Pre-COVID Lows

7 8 9 10 11 12 13 14 15 0 5 10 15 20 25 30

May 15 Nov 15 May 16 Nov 16 May 17 Nov 17 May 18 Nov 18 May 19 Nov 19 May 20 Nov 20 China M1 Money Supply Growth (%) China M2 Money Supply Growth (%) - RHS

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Overall FX Outlook

USD Still Stuck In Downtrend With Strong Inertia

After a 2% slide across April, the USD continues to be on the defensive in May. The US Dollar index (DXY) has also dipped below the psychological 90 level again, for the first time since late February.

It still appears a herculean task to overcome the inertia of the USD downtrend. Even stronger-than-expected April US inflation readings released in May and rhetoric possibly hinting of monetary policy normalization from some Fed officials could not spur any meaningful recovery in the USD. Fed’s Kaplan was joined by Harker in May, calling for a “sooner than later” discussion on tapering bond purchases (both are non-voters in 2021 FOMC). An unexpected slump in US non-farm payrolls (Apr: 266k vs 1,000k est.) released early May appears to be the key driver of USD weakness though other economic data released across the month portend a strong recovery in the US economy.

Overall, until the Fed begins the tapering discussions which we expect to be around late 2021/ early 2022, the much awaited recovery in the USD may have to wait. In this publication, changes to our suite of FX forecasts include that of EUR, GBP, CNY, PHP and IDR.

In the coming month, a key data point to look out for is US’ May consumer prices (due 10 June). With April’s CPI print already at 4.2%, the highest since 2008, a further spike could intensify the debate whether the ongoing rise in price is as “transitory” as what the Fed has touted and if the Fed is behind the curve.

Major FX Outlook

EUR & GBP Built On Recent Gains As Economic Reopening Plans Accelerate

With the number of daily new virus cases amongst developed economies on a steady retreat, the gradual reopening of these economies and the fading of COVID-19 related tail risks anchored further gains of G-10 currencies against the USD for a second month. A patient Fed looking for more signs of “substantial further economic progress” and a muted response in US Treasury yields to US inflation spikes latched the USD bulls firmly in the stables.

Chart 5: DXY Fell Back Below 90 As Rise In Yield Stalled

88 90 92 94 96 98 100 102 104 0.50 1.00 1.50 2.00

Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 US 10Y Yield (%) DXY - RHS

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The GBP was one of the best-performing currency within G-10 in May, gaining 2.4% against the USD to 1.4150 after the Bank of England (BoE) announced it will reduce its pace of its weekly bond-buying to GBP3.4 billion from GBP4.4 billion (For details, pls refer to Macro Note dated 7-May). The currency outperformance did not come as a surprise as the BoE is seen as having a head start within the Major FX space in the race to normalize monetary policy. Adding to the momentum of the GBP’s recovery was the heavy selling it has endured over the past few years during the Brexit process. As such, our previous set of GBP/USD forecasts now appears too conservative and we upgrade GBP/USD by 3 big figures across the board, to 1.42 in 2Q21, 1.43 in 3Q21, 1.44 in 4Q21, and 1.45 in 1Q22.

EUR/USD solidified recent gains and spent most part of May above 1.20. This comes as the daily new COVID-19 cases in the Eurozone have reached the lowest since last October, facilitating the steady reopening of the various economies within the bloc in the coming months. Brightening growth prospects are also showing up in the gradual grind higher in bund yields, with the 10-year rising to -10 bps in May, the highest level since last May. Against sideways trading in US yields, the 10-year yield gap has narrowed further, to -174 bps as at 25-May from -180 bps at the start of May in favor of the EUR against the USD. With the tailwinds for EUR/USD intensifying, we will upgrade our forecasts by 2 big figures across the board, to 1.23 in 2Q21, 1.24 in 3Q21, and 1.25 in both 4Q21 and 1Q22.

Chart 6: US & Europe Have Largely Flattened Their COVID-19 Curve, Boosting Reopening Plans

Source: Our World In Data, UOB Global Economics & Markets Research

0 200 400 600 800 1000

Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Daily new confirmed COVID-19 cases per million people

EU UK US

Chart 7: The Recent Rebound In EUR/USD Coincided With A Less Negative Yield Spread

-220 -200 -180 -160 -140 -120 -100 1.10 1.12 1.14 1.16 1.18 1.20 1.22 1.24

May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 EUR/USD EUR 10Y - US 10Y (bps) - RHS

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AUD/USD struggled to find direction in May, largely trapped between 0.77 and 0.78 as a retreat in iron ore prices offset the still buoyant risk sentiment. The Reserve Bank of Australia (RBA) is also in a holding pattern until July when it will make a call on extending the benchmark bond for the 3-year yield target and whether to add on to the longer-dated bond buying. With broad USD weakness within the Major FX space, the expected recovery in the AUD is still going to chug along at a modest pace. We reiterate our gradual upward trajectory of AUD/USD towards 0.79 by end-2021.

As the volatility in the US rates market in the past couple of months abates further, USD/JPY is also seen transiting into a sideways pattern in May, within the broader 108 to 110 range. What has emerged lately is a tighter correlation of the USD/JPY to the DXY. As such, with broad USD weakness expected going forth, we reiterate our view of a lower USD/JPY towards 107 end-2021.

Asian FX Outlook

COVID-19 Threat To Growth Recovery May Hinder Specific Asian FX Recovery

While a robust Chinese economy may be the linchpin that supports continued strong demand for exports of other Asian economies, an intensifying wave of COVID-19 infections and accompanying mobility restrictions in some countries may start to undermine the expected GDP recoveries this year.

Our macro team has downgraded 2021 GDP growth of India (from 10.5 to 8.5%, report dated 23-Apr), Thailand (from 3.5% to 1.5%, dated 29-Apr), Indonesia (from 4.0% to 3.8%, dated 5-May) and Philippines (from 7.0% to 5.5%, dated 11-May). For that reason, we expect the recent outperformance (in May) of Asian’s higher-yielders such as INR and IDR may be short-lived and we reiterate our upward trajectory in both USD/INR and USD/IDR, at least till the end of the year. That said, we have lowered USD/IDR by 100 pips across board. USD/IDR is now seen at 14,500 in 2Q21, 14,600 in 3Q21, and 14,700 in both 4Q21 and 1Q22. As for the THB, the worst performing Asian FX this year (-4.5% YTD), we reiterate our view for further weakness towards 32.50 /USD by end-2021.

Now, markets’ attention is squarely on Asia’s latest wave of COVID-19 infections in contrast to US and Europe which are gradually reopening their economies. As such, the effect of the recent bout of USD weakness was not as keenly felt in the Asian FX space. To wit, the average gain of 12 most-traded Asian currencies over the USD was 0.23% in May (as at 25-May), as compared to 1.45% in G-10 FX.

Chart 8: Mobility To Workplace Took A Dip Due To Recent COVID-19 Resurgence

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However, the CNY, the bellwether of Asia FX is still showing no signs of slowing down. Underpinned by the continued strong recovery in the Chinese economy, USD/CNY cracked the its strong support at 6.40 on 26-May. The strongest CNY fixing (at 6.4099) since mid-2018 on the same day led markets to believe that the People’s Bank of China (PBoC) is growing more comfortable with the recent appreciation in the CNY as the currency is keeping pace with gains of other Major FX against the USD. Markets are also pricing for further CNY gains as 3-month USD/CNH reversals dipped to fresh 2-year lows, alongside a slide in USD/CNH forward points. Assuming that US-China trade tensions do not flare up again, there appears scope for further gains in CNY against the USD. Our updated USD/CNY forecasts are 6.36 in 2Q21, 6.33 in 3Q21, and 6.30 in both 4Q21 and 1Q22

As for Singapore and Malaysia, sentiments on the respective currencies have clearly taken a hit amidst the latest virus resurgence and the ensuing tightening of social restrictions.

The Singapore Dollar Nominal Effective Exchange Rate (S$NEER) has pulled back from just over 1% above the policy midpoint in late April to current level of about 0.7% above midpoint while USD/SGD has consolidated between 1.3230 and 1.3400 in the past month. Given that most economic activities in Singapore are still allowed to continue, the hit to GDP and the SGD is likely to be measured for now. As such, we still reiterate our view of further strength in the SGD towards 1.30 /USD by end-2021, in line with a broad Asian FX and CNY recovery as the economic recovery intensifies in 2H21. A downside risk to that outlook is a further escalation of the local virus situation which forces a repeat of the “circuit breaker”. In that scenario, the S$NEER may correct further back towards the midpoint alongside a recalibration of the GDP outlook lower.

For Malaysia, we have recently shave 1% off our GDP forecast to 4% for 2021 from 5% previously, in response to the latest 14-day nationwide lockdown from 1 - 14 June. Assumptions that may cushion downside risks include more economic sectors are allowed to reopen by 3Q21, an accelerated pace of vaccination and additional fiscal support of about 1% - 2% of GDP. For now, we keep our year-end USD/MYR forecast of 4.05 intact while keeping an eye on the broad risk sentiment which may affect portfolio inflows into emerging markets. Investor sentiment turned cautious this morning amid the latest lockdown measures and pending the announcement on additional fiscal support to cushion the effects. Another key event to watch is S&P’s sovereign rating review for Malaysia in June.

Chart 9: Risk Reversals At 2-year Lows Suggest Further RMB Gains

6.30 6.40 6.50 6.60 6.70 6.80 6.90 7.00 7.10 7.20 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

May 18 Sep 18 Jan 19 May 19 Sep 19 Jan 20 May 20 Sep 20 Jan 21 USD/CNH 3-mth 25-delta risk reversal (%) USD/CNH - RHS

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US Monetary Policy Outlook

Rate Hike Expectations Unperturbed

“Transitory” takes the prize for the most repeated word over the past month. The financial press has been all abuzz going into and coming out of this month’s US CPI print, which was universally anticipated to print on the high side due to base effects. The US Fed in the April FOMC has also acknowledged the recent pickup in inflation but policy makers have not been swayed to alter their dovish guidance on where the policy rate is heading.

Consequently, with no new information to work on, market based expectations for liftoff in US Fed Funds Target Rate remained largely unchanged between April and May. The first 25bps hike continues to be priced for late 2022, followed by another in early 2023. In contrast, our US macro team’s view which is more aligned to the FOMC dot plots, expects the first hike to come in 1Q 2024.

Singapore Monetary Policy Outlook

SGD NEER Weaker But Not Enough To Negate SORs Tracking US LIBORs Lower

Domestic sentiments have taken a hit in May as rising COVID-19 infections caused Singapore’s government to tighten movement restrictions. Our SGD NEER model also knee jerked lower to 0.29% above the mid-point before recovering. As the month draws towards a close, the currency basket is largely unchanged compared to its end April level.

Chart 10: US Rate Hike Expectations (OIS Curve)

0.0 0.4 0.8 1.2 1.6 2.0 2.4 Spot 6M 1Y 2Y 3Y 4Y 5Y % May 21 Apr 21

Chart 11: UOB SGD NEER - Distance From Midpoint

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21

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However, the weaker currency intra-month has not been sufficient to negate the impact of lower US LIBORs. Month to date, 3M SOR has declined by 5bps which was primarily a contribution of 3M US LIBOR falling by 4bps. Downward pressure on US LIBORs has been a liquidity driven phenomenon. Ongoing quantitative easing of USD 120 billion a month by the US Fed as well as the US Treasury’s programed run down of their cash balances held at the Fed and their focus on longer maturity debt supply have produced the current situation of excess reserves and collateral shortages.

Based on the Eurodollar futures and the OIS curves, this surplus liquidity environment is expected to last for the rest of 2021. At the same time, the market is not projecting further liquidity driven yield declines given the flat curve over the next few months.

Short Term Money Market Rate Outlook

No Room For Error In SOFR, While SORA Maintains Range

The aforementioned liquidity backdrop has also kept SOFR locked down at 1bps for the month of May. Clearly there is no buffer left to prevent a shock negative SOFR fixing, especially when overnight UST repos have already been transacting at negative yields.

Chart 12: Surplus Liquidity For The Rest of 2021

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40

May 21 Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 Dec 22

%

3M Eurodollars 1M OIS

Chart 13: Negative O/N Repos

-0.10 -0.05 0.00 0.05 0.10 0.15

Jan 21 Feb 21 Mar 21 Apr 21 May 21

%

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The FED is keen to avoid an extended run of negative SOFR fixings and it has the tools to help prevent such a situation from developing, such as increasing the rate it pays on Interest on Excess Reserves (IOER) and on their overnight reverse repos. Nonetheless, these policy tweaks are only a stop-gap measure and the underlying surplus liquidity situation will only recede when quantitative easing ends and/or the US Treasury steps up its issuances, particularly, for shorter maturities. Having said that, there is increasing market expectation that the FED will at least need to raise IOER by 5 bps as soon as the next FOMC in mid June, so as to stem any further slide in SOFR.

For SORA, the threat of negative yields is less acute based on upward trajectory in the compounded averages. Day to day, we do observe SORA fixings in the single digit area but only 2% of observations year to date have actually been under 5bps. In contrast, SORA has been more prone to episodes of liquidity squeezes with 6% of observed fixings above 0.35% thus far in 2021.

Overall, given the grind in money market rates lower, we adjust our forecasts for 3M USD Libor, USD SOFR and SGD SORA to 0.20%, 0.09% and 0.14% respectively.

Long Term Yield Outlook

10Y Yields Stay Range Bound

10Y UST and SGS yields eased lower by 5bps and 10bps respectively in May. Changes to the nominal UST yield was driven by a decline in the 10Y UST real yield of 7bps which was offset by a 2bps uptick in the inflation breakeven.

Chart 15: Compounded SORAs

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35

Aug 20 Nov 20 Feb 21 May 21

%

1M SORA 3M SORA 6M SORA

Chart 14: Distribution of Daily SORA Fixings

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 More Fr equenc y % May YtD

Chart 16: 10Y UST Yield Change (YtD)

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Jan 21 Feb 21 Mar 21 Apr 21 May 21

C

hange (

%

)

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Despite negative domestic developments on the COVID-19 front, the 10Y SGS has managed to outperform 10Y UST in May. 10Y SGS – UST spread fell to -9bps but further declines may face headwinds in the short term given that there will be a new 10Y SGS issue in June.

Curvature wise, both of the 2s10s curves in UST and SGS are heading into the end of the month slightly flatter by 4bps and 2bps respectively, following lower long term yields.

Overall, we make no change to our existing suite of long term yield forecasts and continue to see 10-year US Treasuries yield at 2.0% and 10-year Singapore Government Securities yield at 1.95% by year end.

Catalysts For Higher Yields

In our minds, the recent inflation uptick has been well telegraphed and hence already priced into the market, culminating in March highs. Scope for further overshooting of inflation expectations in the intermediate time horizon is limited in our view based on the extreme inversion seen in the inflation breakeven curve. If the transitory inflation narrative were to give way to one that is more persistent, we could well be in for another inflation shock with long term breakeven being repriced higher.

However, this is not our base case assumption for our yield outlook. Instead, we see positive policy impulse stemming from US FED tapering of quantitative easing and the enactment of US President Biden’s American Jobs Plan as the main driver of our bias for higher long term yields and steeper curves.

Chart 18: 30Y US BE Inflation

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2002 2005 2008 2011 2014 2017 2020 %

Chart 17: 5s30s US BE Inflation Curve

-0.3 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 2002 2005 2008 2011 2014 2017 2020 %

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EUR/USD: 1.2195

Odds for EUR/USD to move above the year-to-date top near 1.2350 within these couple of months are not high.

Source: Reuters, UOB Global Economics & Markets Research

In the FX Technical section of our Quarterly Global Outlook published on 19 Mar 2021 (when EUR/USD was trading at 1.1970), we highlighted that “bias for EUR/USD is on the downside but any weakness is expected to encounter solid support at 1.1740 (55-week exponential moving average)”. We added, EUR “could dip below this solid support but the prospect for a move to the November 2020 low of 1.1602 is not high”

EUR/USD subsequently dipped to 1.1702 in early April before rebounding. While the rebound broke above February’s high of 1.2242, it failed to move clearly above the next resistance at 1.2265 (EUR/USD touched 1.2266 last week). Weekly MACD has just turned positive but the failure to clear 1.2265 coupled with the pullback that breached the rising trend-line support on the daily chart last Friday (28 May) indicates that the odds for EUR/USD to move above the year-to-date top near 1.2350 within these couple of months are not high.

The near-term bias is tilted to the downside (daily MACD is weakening) but any decline is unlikely to threaten the major support zone near 1.1850 (rising trend-line and 55-week exponential moving average). On a shorter-term note, May’s low near 1.1985 is already a strong support level. To look at it another way, EUR/USD could edge lower within these 1 to 2 months before making an attempt to advance towards 1.2350 at a later stage.

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FX, INTEREST RATES & COMMODITIES

Forecast

* Changes made to forecasts as compared to our previous report dated 30 April 2021 Source: Bloomberg, UOB Global Economics & Markets Research

FX 28 May 21 2Q21F 3Q21F 4Q21F 1Q22F USD/JPY 110 109 108 107 107 EUR/USD* 1.22 1.23 1.24 1.25 1.25 GBP/USD* 1.42 1.42 1.43 1.44 1.45 AUD/USD 0.77 0.77 0.78 0.79 0.79 NZD/USD 0.72 0.72 0.73 0.74 0.74 DXY* 90.0 89.7 89.0 88.5 88.4 USD/CNY* 6.37 6.36 6.33 6.30 6.30 USD/HKD 7.76 7.75 7.75 7.75 7.75 USD/TWD 27.68 27.80 27.60 27.50 27.50 USD/KRW 1,116 1,100 1,090 1,080 1,080 USD/PHP* 47.74 47.80 47.60 47.50 47.50 USD/MYR 4.14 4.10 4.08 4.05 4.05 USD/IDR* 14,285 14,500 14,600 14,700 14,700 USD/THB 31.28 31.50 32.00 32.50 32.50 USD/VND 23,039 23,050 23,050 23,000 23,000 USD/INR 72.44 75.00 76.00 76.50 77.00 USD/SGD 1.32 1.32 1.31 1.30 1.30 EUR/SGD* 1.61 1.62 1.62 1.63 1.63 GBP/SGD* 1.88 1.87 1.87 1.87 1.89 AUD/SGD 1.02 1.02 1.02 1.03 1.03 SGD/MYR 3.13 3.11 3.11 3.12 3.12 SGD/CNY* 4.82 4.83 4.83 4.85 4.85 JPY/SGDx100 1.21 1.21 1.21 1.21 1.21 RATES 28 May 21 2Q21F 3Q21F 4Q21F 1Q22F

US Fed Funds Rate 0.25 0.25 0.25 0.25 0.25

USD SOFR* 0.01 0.02 0.05 0.09 0.13

USD 3M LIBOR* 0.13 0.15 0.18 0.20 0.25

US 10Y Treasuries Yield 1.59 1.90 1.95 2.00 2.10

JPY Policy Rate -0.10 -0.10 -0.10 -0.10 -0.10

EUR Refinancing Rate 0.00 0.00 0.00 0.00 0.00

GBP Repo Rate 0.10 0.10 0.10 0.10 0.10

AUD Official Cash Rate 0.10 0.10 0.10 0.10 0.10

NZD Official Cash Rate 0.25 0.25 0.25 0.25 0.25

COMMODITIES 28 May 21 2Q21F 3Q21F 4Q21F 1Q22F

Gold (USD/oz) 1,907 1,850 1,900 1,950 1,950

Brent Crude Oil (USD/bbl) 69 60 65 70 70

LME Copper (USD/mt) 10,258 9,000 9,500 10,000 10,000

CNY 1Y Loan Prime Rate 3.85 3.85 3.85 3.85 3.85

HKD Base Rate 0.50 0.50 0.50 0.50 0.50

TWD Official Discount Rate 1.13 1.13 1.13 1.13 1.13

KRW Base Rate* 0.50 0.50 0.50 0.50 0.75

PHP O/N Reverse Repo 2.00 2.00 2.00 2.00 2.00

SGD SORA* 0.24 0.07 0.10 0.14 0.18

SGD 3M SIBOR 0.44 0.40 0.40 0.40 0.40

SGD 3M SOR 0.23 0.25 0.25 0.25 0.25

SGD 10Y SGS 1.48 1.85 1.90 1.95 2.05

MYR O/N Policy Rate 1.75 1.75 1.75 1.75 1.75

IDR 7D Reverse Repo* 3.50 3.50 3.50 3.50 3.50

THB 1D Repo* 0.50 0.50 0.50 0.50 0.50

VND Refinancing Rate 4.00 4.00 4.00 4.00 4.00

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Malaysia: Export And Import Values Hit New Highs In April, 28 May 2021

The Central Bank Watch, 28 May 2021

South Korea: Earlier Monetary Policy Normalisation In Focus As Outlook Improves, 27 May 2021

New Zealand: RBNZ Holds, But Surprises With Rising Projections Of Cash Rate, 27 May 2021

Indonesia: BI Holds Benchmark Rate Unchanged in May, 25 May 2021

Singapore: April’s Manufacturing Continued To Expand On The Back Of Semiconductor Demand, 25 May 2021

Singapore: 1Q21 GDP Expanded Above Estimates, But COVID-19 Risks Inject A High Degree Of Uncertainty, 25 May 2021

Indonesia: 1Q21 Current Account Returned To Deficit As Imports Surged, 25 May 2021

Singapore: April’s Inflation Edged Higher On The Back Of Low Base Effects, 24 May 2021

Malaysia: Transitory Factors Lift Inflation Up To 4-Year High, 21 May 2021