• Dollar index takes breath from recent bull-shock

• MYR to fluctuate in the range of 4.1830 and 4.1980 against US dollar

Global Highlights

The dollar index inched higher by 0.02% to 97.270, after gaining significantly during last few sessions on the back of hawkish Fed. On the data front, personal spending in the US fell 0.6% m/m in December 2021, the first decrease in 9 months, while the personal income rose 0.3% m/m in December 2021, following a 0.5% growth in November (cons. 0.3%). Also, December’s personal consumption expenditure price index rose by 5.8% y/y, the largest annual rate since July 1982.

Equities pared recent sharp losses as the Dow Jones gained by as much as 1.65% to 34,725 while the S&P500 rose 2.43% to 4,432. The UST benchmark 10-year yield fell 3.0bps to 1.769%. Gold extended its losing position as it dropped 0.33% to US$1,732/oz.

The euro took a breath from recent fall as it added 0.05% to 1.115, the lowest level since June 2020. With the Ukraine-Russia tension has not subside yet, negative sentiment remained weighing on the common currency. The economic sentiment indicator in the Euro Area fell to 112.7 in January from 113.8 in January (cons. 114.5) which marked the lowest reading in 9 months.

The British pound added by 0.13%% to 1.340, a level we have not seen since December 2021. In the political space, focus will be on the report into pandemic parties in Boris Johnson’s office.

The Japanese yen strengthened 0.09% to trade at 115.26. The Chinese yuan firmed 0.10% to 6.361, recovering some losses ahead of Lunar New Year.

Crude oil resumed its bull run to its 2014 level as the Brent jumped 0.77% to US$90 per barrel while WTI soared 0.24% to US$87 per barrel. The gains can be attributed to the geopolitical tensions, intensifying the supply concerns.

Malaysia Highlights:

The local currency ringgit pared last week’s losses as it strengthened 0.14% to 4.189 on Friday. It was traded within the range of 4.2005 and 4.1867.

The FBM KLCI gained 0.27% to 1,520 due to bargain hunting activities. Detailed transactions showed that both the local retailers and foreign investors were the net sellers with RM11.3mil and RM99.1mil, respectively, offset by the local institutions net buying inflow with RM110.4mil.

In the local bond market, the benchmark yields were mixed; 3-years benchmark +1.0bps to 2.840%, 5-years -1.0bps to 3.300%, 7-years +0.5bps to 3.520%, and 10-years -0.5bps to 3.700%.

The IRS yield curve steepened as the (3Y) -1.0bps to 2.885%, (5Y) -2.8bps to 3.157, but both (7Y) and (10Y) remained at 3.350% and 3.550%, respectively.

Against major currency, the ringgit took the upper hand as it strengthened vs. EUR by 0.71% to 4.664, vs. GBP by 0.55% to 5.610, vs. AUD by 1.43% to 2.933, vs. JPY by 0.02% to 3.636, and vs. CNY by 0.03% to 1.518. Regionally, the ringgit was mixed; it firmed against SGD by 0.58% to 3.091, vs. THB by 0.48% to 7.977, vs. IDR by 0.05% to 3,431, vs. VND by 0.37% to 5,409, but weakened vs. PHP by 0.10% to 12.214.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1800 and 4.1830 while our resistance is pinned at 4.1980 and 4.2100.

Source: AmInvest Research - 31 Jan 2022