• Wall Street closes in the red amidst risk-off sentiment

• MYR to fluctuate in the range of 4.1730 and 4.1890 against USD

Global Highlights

US dollar – The greenback took advantage of the risk-off sentiment due to Ukraine-Russia tensions as it rose 0.18% to 96.200. Western allies announced further sanctions on Russia following President Vladimir Putin’s move to deploy Russian troops into two separatist regions while Ukraine has declared a state of emergency amidst intensifying fears over the conflict.

US equities – Equities remained in the red for the second consecutive day as the Dow Jones fell 1.38% to 33,132 points, the S&P500 declined 1.84% to 4,226, and the Nasdaq Composite dropped 2.57% to 13,037 points. The benchmark UST 10-years yield was volatile as it rose 5.2bps to 1.991%.

Euro – The euro fell 0.16% to trade at 1.131 amidst the Eastern Europe tensions and following the final inflation data for the Eurozone. The inflation rate was confirmed at 5.1% y/y for January 2022, which marked a fresh record rate and in line with market expectation.

British pound – The pound lost 0.30% to trade at 1.354, close to last week’s low as the Ukraine-Russia tension remained in the spotlight.

Japanese yen – The yen firmed slightly by 0.06% to 115.01 amidst safehaven seeking sentiment after losing its ground during the previous session.

Chinese yuan – The yuan strengthened 0.19% to 6.315, almost reaching its 4-year high as the current geopolitical tension boosted foreign demand for the Chinese currency. With the latest sanctions forcing Russian firms to move away from the USD and into the Chinese yuan, it will push the yuan stronger over the longer term. Although a stronger yuan could risk the PBoC intervening in the market to maintain its strong export position.

Korean won – The won depreciated 0.08% to 1,193.5, still not too far away from its recent 20-month low. On the data front, the Economic Sentiment Index, a composite of the Business Survey Index and Consumer Survey Index, edged up to 105.8 from 105.7 in the previous month. The Bank of Korea (BoK) will announce its decision today on the interest rate following backto-back hikes in the previous two meetings. The market is expecting the BoK to pause its rate hike and will resume during the next quarter.

Australian dollar – Robust commodities prices provided some uplift on the Aussie dollar as it climbed 0.21% to 0.723 despite the risk-off sentiment permeating the market. The newly released wage growth figure, which rose 2.3% y/y in the last quarter of 2021, fell short of market expectations of 2.4% y/y (3Q21: +2.2%), and slower than the Reserve Bank of Australia’s anticipation. This could force policymakers to delay a rate hike as its governor Philip Lowe said earlier this year that a 3% wage growth will justify a rate hike.

Commodities Highlights

Crude oil – Investors were seen weighing the possibility of crude oil supply disruptions resulting from the Ukraine’s crisis against the prospect of Iranian crude returning to the market. Brent rose 0.89% to US$98 per barrel while WTI fell 0.27% to US$92 per barrel.

Gold – Gold prices rebounded as it added 0.55% to US$1,909/oz on Wednesday, reaching a level we have not seen since June 2021.

Malaysia Highlights

Malaysian ringgit – The ringgit firmed 0.01% to trade at 4.185 and traded within the range of 4.182 and 4.1858.

KLSE – The FBM KLCI rose 0.58% to 1,586 amidst mixed performances in the APAC region. Looking at the detailed transactions, foreign investors were net buyers with RM159.7mil, offset by local institutions and retailers with RM3.6mil and RM156.1mil, respectively.

Fixed Income – In the local bond market, MGS yields were mixed as the 5- year and 7-year were unchanged at 3.315% and 3.590%, respectively, but the 3-year was -2.0bps to 2.700%, and the 10-year +0.5bps to 3.675%.

Rates – The IRS yields were mixed as the (3Y) +1.0bps to 2.910%, (5Y) +1.5bps to 3.165%, (7Y) was flat at 3.350%, and (10Y) -0.5bps to 3.550%. KLIBOR was unchanged at 1.970%.

Against major currencies – The ringgit was mostly on the losing side as it depreciated vs. the EUR, GBP, AUD, JPY, CNY, SGD, THB, IDR, and PHP but appreciated against the VND.

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 4.1890 and 4.1940.

Source: AmInvest Research - 24 Feb 2022