• US January inflation soars higher than expected

• MYR to fluctuate in the range of 4.1790 and 4.1930 against the USD

Global Highlights

US dollar – The Dollar Index gained marginally by 0.06% to 95.553, following the latest headline inflation numbers which jumped to the highest in four decades. The market is now pricing in for the Fed to aggressively adjust the interest rate soon.

US equities – The US stock market turned to a sea of red, responding to the high inflation numbers on Thursday, where the Dow Jones recorded a drop of 1.47% to 35,242, the S&P 500 lost 1.81% to 4,504, and the Nasdaq shed 2.10% to 14,186. The UST10-year yield increased by 8.8bps to settle at 2.029%.

Euro – Interestingly, the euro rose 0.03% to 1.1423 as traders in Europe also responded to the high US inflation numbers.

British pound – The British pound slid 0.06% to 1.354, an outlier relative to most European currencies.

Japanese yen – The Japanese yen strengthened by 0.03% to 115.52 in a similar narrative where inflation numbers that was reported in the US moved the yen slightly higher.

Chinese yuan – The Chinese yuan slightly appreciated 0.06% to 6.3541 as the market is expected to react to the same storyline across Asia.

Korean won – The South Korean won depreciated by 0.01% to 1,196.43.

Australian dollar – The Aussie dollar surged by 0.46% to 0.718, rising the most amongst major currencies.

Commodities Highlights

Crude oil – Supply disruptions, combined with high demand and falling stockpiles remained the narrative that is influencing the crude oil prices. With the rate hike prospect coming into the picture following unexpectedly high inflation data released last night, oil prices were mixed. Brent fell 0.15% to US$91 per barrel while WTI inched higher by 0.25% to US$90 per barrel

Gold – Precious metal gold slipped 0.36% to US$1,827/oz. Prospect for gold was challenged by the rate hike prospect but remains attractive on the escalation of Eastern Europe geopolitical tension.

Malaysia Highlights

Malaysian ringgit – The Malaysian ringgit weakened strengthened slightly by 0.03% to 4.184 ahead of US inflation data and traded within the range of 4.1865 and 4.1823.

KLSE – The local bourse’s FBM KLCI posted another strong day as it rose 1.40% to 1,552, driven by banking and plantation heavyweights. Detailed transactions showed that foreign investors remained net buyers with a RM228.4mil position while local institutions and retailers were net sellers with RM163.6 and RM64.8mil positions.

Fixed Income – The local bond market saw improving movement. The benchmark yield 5-year was -3.0bps to 3.310%, while the 10-year -1.0bps to 3.690%, but the 3- year and 7-year remained flat at 2.850%, and 3.570% respectively.

Rates – The IRS yield curve shifted lower; the (3Y) -2.5bps to 2.895%, (5Y) -1.5bps to 3.170%, (7Y) -0.6bps to 3.370%, (10Y) -2.0bps to 3.550%. KLIBOR remained flat at 1.970%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1760 and 4.1790 while our resistance is pinned at 4.1930 and 4.1960.

Source: AmInvest Research - 11 Feb 2022