Malaysia’s economic growth in the final quarter of 2024 could potentially exceed expectations, following a strong performance in retail and wholesale trade data.

Gross domestic product (GDP) in the fourth quarter could expand faster than the consensus’ prediction and the official advance estimate of 4.8% year-on-year, economists said. The full GDP data is expected to be released on Friday.

“Growth is expected to be supported by continued expansion in the services, manufacturing and construction sectors,” said Hong Leong Investment Bank. The research house expects growth to come in at 5.0% year-on-year for the fourth quarter.

Data out on Wednesday (Feb 12) showed that Malaysia’s wholesale and retail trade picked up and grew 5.7% year-on-year in December 2024. Distributive trade is part of the services sector that accounts for more than half of the country’s economic output.

The last month of 2024 benefitted from holiday season and school breaks that typically bring a surge in festive shopping and higher family spending. An influx of foreign tourists and an increase in civil servant salaries also boosted private consumption.

Going ahead, “we anticipate sustained consumer demand” in the first three months of 2025, supported by the long school holidays, civil servants’ salary increases, the new minimum wage, and cash handouts, said BIMB Securities.

With strengthening consumer demand, spending patterns have increasingly shifted towards retail that now hold the highest ever share at 43.3% of the total distributive trade, BIMB Securities noted. Wholesale is still the largest component, at 44.3%.

There are downside risks, however, going ahead, from subsidy rationalisation that necessitate gradual implementation and government assistance measures as buffers to cushion the increase in costs of living, the house added.

Source: Theedgemarkets

The USD/CAD pair continues its losing streak for the third successive session, trading around 1.4260 during the Asian hours on Thursday. The daily chart's technical analysis suggests potential for bearish bias as the pair breaks below the rectangular pattern.

The USD/CAD pair remains below the nine- and 14-day Exponential Moving Averages (EMAs), underscoring bearish sentiment and indicating weak short-term price action. This positioning reflects ongoing selling interest and suggests further downside risks.

Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 mark, confirming that bearish outlook is prevailing.

On the downside, the USD/CAD pair could find its immediate support at the psychological level of 1.4250. A break below this level could lead the pair to explore the region around the psychological level of 1.4200.

The USD/CAD pair may struggle to re-enter the rectangle. If it manages to do so, the bearish bias could weaken, potentially driving the pair toward the nine-day EMA at 1.4316, followed by the 14-day EMA at 1.4336. A breakout above these levels may strengthen short-term momentum, paving the way for a test of the rectangle's upper boundary at 1.4530.

Source: FXSTREET

AUD/JPY holds ground as Australia’s Consumer Inflation Expectations rose to 4.6% in February from 4.0% prior.

Market caution increased as the White House indicated that President Trump could unveil his reciprocal tariff plan on Thursday.

Japan's PPI rose 4.2% YoY in January, marking the highest reading since May 2023.

AUD/JPY remains steady after registering gains in the previous three sessions, trading around 97.00 during Asian hours on Thursday. The Australian Dollar (AUD) strengthened against its counterparts following an increase in Australia’s Consumer Inflation Expectations, which rose to 4.6% in February from January’s 4.0%

However, the upside for the AUD/JPY cross may be capped due to mounting concerns over a potential global trade war. Late Wednesday, the White House indicated that US President Donald Trump could unveil his reciprocal tariff plan before meeting Indian Prime Minister Narendra Modi on Thursday, according to CNBC. Trump has recently signaled his intention to impose tariffs on all nations that levy import duties on the United States (US).

Additionally, the Japanese Yen (JPY) gains support following the release of stronger-than-expected Producer Price Index (PPI) data from Japan, reinforcing expectations of further rate hikes by the Bank of Japan (BoJ).

Japan's PPI rose 4.2% year-over-year in January 2025, accelerating from an upwardly revised 3.9% in the previous month and surpassing market expectations of 4.0%. This marks the 47th consecutive month of producer inflation and the highest reading since May 2023. On a monthly basis, producer prices increased by 0.3%, aligning with estimates but easing slightly from December’s 0.4% growth. The data highlights expanding inflationary pressures in Japan, further supported by recent wage growth figures, strengthening the case for additional BoJ rate hikes.

Source: FXSTREET

Fundamentals

The USD/CHF pair weakens to near 0.9110, snapping the fifth-day winning streak during the early European session on Thursday. The concerns about US President Donald Trump’s trade tariff and weakening of the US Dollar (USD) drag the pair lower. Investors brace for the US weekly Initial Jobless Claims and Producer Price Index (PPI), which are due later on Thursday. 

Fed Chair Jerome Powell on Wednesday emphasized that the central bank is in no rush to cut interest rates during a second congressional hearing this week but said that there has been "great progress" on inflation. The USD weakens as traders took profits and evaluated whether January's inflation report was an anomaly and unlikely to signal a larger trend toward higher prices.

Data released by the US Bureau of Labor Statistics on Wednesday showed that the Consumer Price Index (CPI) rose 3.0% year-on-year in January versus 2.9% prior. This reading came in hotter than the 2.9% expected. The core CPI, which excludes food and energy costs, climbed 3.3% in January, compared to the previous reading of 3.2% and the estimation of 3.1%. On a monthly basis, the headline CPI inflation jumped to 0.5% in January from 0.4% in December, while the core CPI increased to 0.4% in January from 0.2% recorded in December. 

On the Swiss front, the escalating geopolitical tensions in the Middle East could boost the Swiss Franc (CHF), a safe-haven currency. Israel's Prime Minister Benjamin Netanyahu said late Tuesday that the ceasefire will be over and Israel will resume “intense fighting” in Gaza if Hamas doesn’t release “our hostages” by Saturday noon. 

Source: FXSTREET

Fundamentals