• Crude oil inventory drops more than expected

• MYR to fluctuate in the range of 4.1710 and 4.1930 against the USD

Global Highlights

US dollar – The Dollar Index was down by 0.16% to 95.494 with the market likely to have priced in an aggressive monetary policy tightening by the Fed. Voting Fed member Loretta Mester commented that there is no urgency to make a half percentage point hike in the upcoming meeting, and all decisions shall be made based on how big the price pressure is.

US equities – The US stock market logged in some gains where the Dow Jones rose 0.86% to 35,768, the S&P 500 increased by 1.45% to 4,587, and the Nasdaq soared 2.08% to 14,490. The UST10-year yield fell 2.1bps to settle at 1.942%.

Euro - The euro gained 0.09% to 1.143 as politics and a hawkish ECB tone continued to affect the narrative on the currency.

British pound - The British pound declined by 0.06% to 1.354. The monthly GDP numbers for the UK will be published on Friday where December’s growth number could be lower than November’s due to Omicron.

Japanese yen - The Japanese yen gained by 0.03% to 115.52, despite Omicronrelated cases continuing to stay high.

Chinese yuan – The Chinese yuan also strengthened by 0.06% to 6.363 as the market remained calm prior to the release of US inflation numbers.

Korean won – The Korean won appreciated by 0.14% to 1,196.30, similar as most currencies in the region as the market is waiting to the inflation numbers.

Australian dollar – The Aussie dollar gained by 0.46% to 0.718, extending gains for the third day in a row. Among local data, the Consumer Sentiment Index in Australia declined 1.3% m/m to 100.8 points in February 2022 from 102.2 in January, weighed down by concerns over rising inflation and prospects of higher interest rates.

Commodities Highlights

Crude oil – According to the data, US crude oil inventories dropped by 4.7mil barrels last week, contrasting with market forecasts of a 0.37mil gain. This unexpected drop pushed Brent prices higher by 0.85% to US$92 per barrel while WTI up 0.34% to US$90 per barrel.

Gold – Gold rose 0.41% to US$1,833/oz, staying near its two-week high influenced by Eastern Europe political tensions and surging prices.

Malaysia Highlights

Malaysian ringgit - The ringgit firmed slightly by 0.03% to trade at 4.184 amidst choppy and tepid trading this week. It traded within the range of 4.1868 and 4.1835.

KLSE - The local bourse surged 1.40% to 1,552, the highest since mid-January 2022, on continuous support in selected financial services stocks. Detailed transactions revealed that both local institutions and local retailers were net sellers with RM261.3mil and RM18.3mil each while being offset by net buying from foreign investors with RM279.6mil.

Fixed Income - The local bond market saw improved prices as the benchmark 5- year was -1.0bps to 3.340%, 7-year -1.0bps to 3.570%, and 10-year -1.0bps to 3.700%, but the 3-year remained flat at 2.850%.

Rates - The IRS yield curve shifted lower with the (3Y) -3.5bps to 2.920%, (5Y) -4.0bps to 3.185%, (7Y) -2.5bps to 3.375%, and (10Y) -3.0bps to 3.570%. KLIBOR remained at 1.970%.

Against major currencies – The ringgit was mostly underperformed as it weakened vs. EUR by 0.15% to 4.781, vs. GBP by 0.15% to 5.678, vs. AUD by 0.38% to 2.997, and vs CNY by 0.04% to 1.521, but strengthened vs. JPY by slightly 0.02% to 3.622. Regionally, the ringgit was also outshone by its peers as it weakened vs. SGD by 0.05% to 3.115, vs. THB by 0.66% to 7.817, vs. IDR by 0.25% to 3,432, and vs. PHP by 0.23% to 12.271, but weakened vs. VND by 0.10% to 5,430.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1680 and 4.1710 while our resistance is pinned at 4.1930 and 4.1960.

Source: AmInvest Research - 10 Feb 2022