• No major surprises from Powell’s testimony

• MYR to fluctuate in the range of 4.1825 and 4.2030 against US dollar

Global Highlights

The dollar index fell 0.38% to 95.624 following Fed chair Jerome Powell’s remarks during his testimony before the Senate. His statement turned out to be less hawkish with no major surprises, reassuring investors that the US economy is ready for monetary tightening and the current Covid-19 surge has a small impact. He also stated that it will be a “long road” for the policy to be normalized with near-zero interest rate and almost US$9 trillion assets. All eyes now will be on the US inflation data that will be released Wednesday night.

Equities snapped its recent slump as the Dow Jones rose 0.51% to 36,252 while the S&P 500 climbed 0.92% to 4,713. The UST10-year benchmark yield was sent lower by 2.5bps to 1.736%. Gold surged 1.11% to US$1,822/oz. The euro added 0.36% to 1.137. Meanwhile, the World Health Organization (WHO) warned that half of Europe will be infected by Omicron within the next six to eight weeks.

The British pound was also on the winning side as it climbed 0.43% to 1.364. Retail sales in the UK increased 0.6% y/y in December 2021, down from a 1.8% rise in the previous month as the spread of Omicron and updated government guidelines dented spending during the final weeks of the year.

The Japanese yen weakened slightly by 0.09% to 115.30. Prime Minister Fumio Kishida said that Japan will extend its stringent border controls which bar new entry for foreign nationals until the end of February.

In the meantime, the Chinese yuan strengthened 0.03% to trade at 6.374, erasing any losses made last week. On the pandemic development, the city of Tianjin tightened measures as it reported 40 new confirmed coronavirus cases on Tuesday morning, battling an outbreak of the highly infectious Omicron variant of the virus.

Crude oil rebounded as the risk sentiment improved, as the impact of Omicron is deemed to be minimal. Brent soared 3.52% to US$84 per barrel while the WTI surged 3.82% to US$81 per barrel.

Malaysia Highlights:

The ringgit appreciated 0.24%, marking the third day of a winning streak, to 4.191. It was traded within the range of 4.201 and 4.1897.

The FBM KLCI closed in the green as it surged 0.91% to 1,564 amid mixed regional performances, led by finance stocks. Detailed transactions revealed that both local institutions and retailers were net sellers with RM167.6mil and RM3.9mil positions, respectively, offset by foreign investors.

The benchmark yields in local bond market were sent lower; 3-years -2.5bps to 2.825%, 5-years -1.5bps to 3.255%, 7-years - 2.0bps to 3.460%, 10-years -3.0bps to 3.660%.

The IRS yield curve shifted lower with the (3Y) -4.0bps to 2.805, (5Y) -5.5bps to 3.065%, (7Y) -3.5bps to 3.265%, and (10Y) - 4.0bps to 3.490%.

Against major currencies, the ringgit shone as it strengthened vs. the EUR by 0.18% to 4.749, GBP by 0.05% to 5.708, AUD by 0.30% to 3.011, JPY by 0.25% to 3.635, and CNY by 0.20% to 1.521. Regionally, the ringgit was mixed against its peers as it strengthened vs. the SGD by 0.05% to 3.101, IDR by 0.27% to 3,413, and VND by 0.32% to 5,418, but weakened vs. the THB by 0.71% to 7.954 and PHP by 0.09% to 12.199.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1800 and 4.1825 while our resistance is pinned at 4.2030 and 4.2060.

Source: AmInvest Research - 12 Jan 2022