• Brent climbs by 2% as geopolitical tensions heighten

• MYR to fluctuate in the range of 4.1730 and 4.1850 against the USD

Global Highlights

US dollar – The greenback inched higher by 0.09% to 96.13 following reports of border skirmishes as tensions over Ukraine escalate. Investors took shelter in the safe haven as uncertainty intensified.

US equities – Wall Street was flat as the US market was closed due to President’s Day holiday. The Dow Jones, S&P 500 and Nasdaq were unchanged at 34,079, 4,349, and 13,548 points, respectively.

Euro – The euro declined 0.10% to 1.131, near last week’s low as market players look for optimism in the Ukraine-Russia conflict as France announced that the US and Russia had agreed in principle to discuss the ongoing crisis. However, the Kremlin said there were no concrete plans yet. On the data front, the PMI data for Euro Area remained in the growth area as the preliminary Manufacturing PMI edged lower to 58.4 in February, while the Services PMI jumped to 55.8, the highest in three months as Covid restrictions eased.

British pound – The pound gained 0.10% to trade at 1.360. Sentiments in the UK improved as PM Boris Johnson is set to announce the “living with Covid” plan which will end all remaining restrictions in England. The private sector in the UK remained strong as shown by the surging Services PMI headline figure to 60.8 from 54.1 in January 2022. The Manufacturing PMI, meanwhile, stayed strong at 57.3.

Japanese yen – The yen gained some footing as it strengthened 0.23% to trade around 114.74. Business activities in Japan soured as both the Manufacturing and Services PMI nose-dived to 52.9 (from 55.4) and 42.7 (from 47.6), respectively.

Chinese yuan – The yuan weakened 0.15% to 6.335, revolving around the strongest level since 2018, benefitting from strong foreign exchange settlements derived from strong exports. At its February fixing, the PBoC maintained its benchmark interest rate for corporate and household loans. The 1-year loan prime rate was kept at 3.70% after cuts of 5 and 10bps in December 2021 and last month respectively, while the 5-year rate was flat at 4.60% after a 5bps cut last month. With China’s inflation rate remaining tepid based on recent data, the PBoC still has room to ease its policies in supporting growth.

Korean won – The won was up 0.32% to 1,191.83, the strongest level for a month.

Australian dollar – The Aussie dollar gained 0.18% to 0.719, its highest level since January 2022, despite the general risk-off sentiment seen in the market. IHS Markit report showed that both Manufacturing PMI and Services PMI are well in the healthy growth region at 57.6 and 56.4, respectively. Also, Australia has opened its international borders to all vaccinated tourists starting Monday, nearly two years after the nation first imposed some of the world's strictest Covid-19 travel restrictions.

Commodities Highlights

Crude Oil – Oil was traded higher on the back of rising geopolitical tension in the Eastern Europe. Brent rose 1.98% to US$95.39 per barrel, while WTI was flat at US$91 per barrel. Meanwhile, investors continued to monitor efforts to revive the 2015 Iran nuclear agreement after a senior European Union official said Friday that a deal was “very very close.” Analysts suggested that a potential deal could add more than 1 million barrels a day of Iranian crude to the market.

Gold – The precious yellow metal rose 0.41% to US$1,906/oz, surpassing the six-month high it reached recently. Gold’s attractiveness was driven by the US Fed’s policy uncertainty, Ukraine–Russia conflict and higher inflation levels across the globe.

Malaysia Highlights

Malaysian ringgit – The ringgit strengthened 0.15% to around 4.179, while being traded within the range of 4.1892 and 4.1772

KLSE – The FBM KLCI tumbled 1.27%% to 1,582 from 1,603 on Friday. Both local retailers and foreign investors were net buyers with RM129.1mil and RM41.8mil, respectively, offset by the net selling from local institutions at RM170.9mil.

Fixed Income – In the local bond market, the MGS yields were mixed. The 3- year was -1.5bps to 2.725%, but the 5-year was +0.5bp to 3.305%, and 10- year +1.0bps to 3.670%. The 7-year was flat at 3.590%.

Rates – The IRS yields were mixed as well as the (3Y) +2.0bps to 2.920%, but the (5Y) -0.5bps to 3.175%, (7Y) -2.8bps to 3.350%, and (10Y) was unchanged at 3.560%. KLIBOR remained at 1.970%.

Against major currencies – The ringgit strengthened vs. the EUR, GBP, AUD, SGD, THB, PHP, IDR, VND and CNY but closed weaker against the JPY.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1690 and 4.1730 while our resistance is pinned at 4.1850 and 4.1890.

Source: AmInvest Research - 22 Feb 2022