• US inflation rate soars to 40-year high

• MYR to fluctuate in the range of 4.1753 and 4.1920 against US dollar

Global Highlights

The dollar index slipped 0.74% to 94.915 following the release of the US inflation data. The Consumer Price Index (CPI) for December surged by 7.0% y/y, the highest since 1982, and up from 6.8% in the month before (cons. 7%). It eased concerns on any significant or surprise monetary tightening moves that the Federal Reserve has to take to contain inflation. Excluding food and energy, the core CPI jumped 5.5% y/y in the same month.

Equities were in the green when the Dow Jones rose 0.11% to 36,290, and the S&P 500 added 0.28% to close at 4,726. The UST10- year benchmark yield added 0.7bps to 1.743%. Gold extended its gains by 0.25% to US$1,826/oz.

The euro soared 0.66% to its two-month high at 1.144. Industrial production in the eurozone fell 1.5% y/y but rose 2.3% on a monthly basis, snapping its three consecutive months of contraction. The British pound surged 0.48% to 1.370.

The Japanese yen firmed 0.57% to 114.64. Reuters Tankan, a monthly survey of leading Japanese companies, showed that the headline figure dropped to +17 for January 2022 from +22 in the previous month, underscoring an economy that is facing pressure from the Omicron variant as well as rising energy and raw material costs.

The Chinese yuan strengthened significantly by 0.24% to 6.358. Less-than-expected inflation data may point to more easing of the policy coming in from authorities. The headline inflation rate in China tumbled to 1.5% y/y in December, down sharply from 2.3% in the previous month (cons. 1.8%).

Crude oil prices jumped on the back of easing concerns on the Omicron variant and larger-than-expected inventory drawdown. Data from the EIA showed that US crude oil inventories shrank by 4.5mil barrels in the week ending 7 Jan, extending the current period of declines to seven weeks (cons. 1.9mil decline). Brent surged 1.13% to US$85 per barrel while the WTI gained 1.75% to US$83 per barrel.

Malaysia Highlights:

The ringgit strengthened 0.12% to trade at 4.185 on the back of improving risk sentiment and weaker dollar, and was traded within the range of 4.190 and 4.1765.

The FBM KLCI slipped 0.07% to 1,563, despite the positive performance in regional bourses. Detailed transactions revealed that local retailers and foreign investors were net buyers with RM3.6mil and RM76.4mil, respectively, while offset by local institutions.

The local benchmark yields shifted lower as the 3-year was at -3.0bps to 2.795%, 5-year -1.5bps to 3.215%, 7-year -2.0bps to 3.435%, but the 10-year remained flat at 3.660%.

The IRS yields were mixed; the (3Y) -1.0bps to 2.795%, (5Y) +0.5bps to 3.070%, (7Y) +1.0bps to 3.275%, while the (10Y) was unchanged at 3.490%. KLIBOR fell 1.0bps to 1.980%.

Against major currencies, the ringgit mostly on the losing side as it weakened vs. EUR by 0.17% to 4.757, vs. AUD by 0.25% to 3.018, vs. JPY by 0.52% to 3.654, and vs. CNY by 0.12% to 1.519, but strengthened slightly vs. GBP by 0.07% to 5.704. Regionally, the ringgit outshone against its regional peers. It appreciated vs. SGD by 0.10% to 3.098, vs. THB by 0.09% to 7.960, vs. IDR by 0.26% to 3,422, vs. PHP by 0.30% to 12.236, and vs. VND by 0.09% to 5,423.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1723 and 4.1753 while our resistance is pinned at 4.1920 and 4.1953.

Source: AmInvest Research - 13 Jan 2022