• FOMC minutes suggests interest rates hike likely to occur in March 2022

Global Highlights

US dollar – The US Dollar Index slipped by 0.30% to 95.701 where the market reacted to the latest FOMC meeting minutes, suggesting that the federal funds rate is likely to be raised in the upcoming March meeting. The FOMC also suggested that the path of policy would depend on economic and financial developments. The latest inflation numbers were the highest, and the market has now priced in for a faster rate adjustment this year, where a 50bps rate hike is likely to happen in the next meeting.

US equities – The equity market was mixed, where the Dow Jones Industrial Average went down by 0.16 to 34,934, the Nasdaq declined by 0.11% to 14,124 and the S&P 500 gained by 0.09% to 4,475. The UST-10y is now at 2.038, 0.52bps lower than the previous day.

Euro – The euro closed 0.12% stronger at 1.137. On the macro front, the Industrial Production Index in the Euro Area rose 1.2% m/m, beating market expectation of 0.3% m/m despite the sudden spike of Omicron.

British pound – The pound rose 0.35% to 1.359, despite latest inflation release in the UK increasing to 5.5% y/y, the highest reading recorded since March 1992. The main impetus for the high inflation was prices of housing and household services, and transport.

Japanese yen – The yen declined by 0.08% to 115.52.

Chinese yuan – The yuan was weaker by 0.03% to 6.337. the latest inflation number was at 0.9%, reaffirming a receding trend for the past three months. This was reflected by a steeper decline in several food prices, including pork, housing and clothing. Prices for transport increased by 5.2% y/y.

Korean won – The won firmed 0.19% to 1,197.56. The unemployment rate (seasonally adjusted) declined from 3.8% to 3.6% in January 2022. The economy added around 1.1 million jobs in January relative to the same month last year. This latest reading and accelerating prices could justify the Bank of Korea’s move to raise the policy rate one more time.

Australian dollar – The Aussie edged up 0.60% to 0.720.

Commodities Highlights

Crude oil –The WTI closed higher at US$93.66 per barrel, and Brent was also higher at US$94.81 per barrel.

Gold - Gold gained by 0.87% to US$1,870/oz.

Malaysia Highlights

Malaysian Ringgit – The local currency slid by 0.04% to 4.185.

KLSE – The FBM KLCI increased by 0.22% to 1,603, a continuous improvement for the past few days despite the sudden spike related to Omicron, where confirmed cases now have increased to 27K per day.

Fixed Income – The MGS yields were lower in the longer tenors, including the 7-year, which was down by 1.0bps to 3.583%, and the 10-year lower by 1.1bps to 3.683%.

Rates – The IRS yields for the 3Y remained at 2.935%, 5Y down by 1.0bps to 3.200%, 7Y up by 2.45bps to 3.400%, and 10Y increased by 1.0bps to 3.595%. KLIBOR remained at 1.970%.

Against major currencies – The ringgit was lower against most Asian currencies including the CNY, THB, IDR, and PHP. The currency was higher against the EUR, GBP, AUD, JPY, SGD, and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1845 and 4.1875 while our resistance is pinned at 4.1930 and 4.1960.

Source: AmInvest Research - 17 Feb 2022