• Risk mood improves as Biden unveils new sanctions Thursday night

• MYR to fluctuate in the range of 4.1960 and 4.2120 against the USD

Global Highlights

US dollar – The Dollar Index fell 0.54% to 96.615 as it took a breather from the recent rally following the release of PCE data last Friday. The Personal Consumption Expenditure Price Index rose by 6.1% year-on-year in January of 2022, the highest since February 1982, and above 5.8% in December. This brought back the narrative of the Fed tightening, although we expect it will be cautious to prevent a policy mistake. Overnight, the risk sentiment improved as President Biden announced sanctions on Russia. But over the weekend, reports showed that Western allies have excluded “selected” Russia banks from the SWIFT payment system to hurt Russia financially.

US equities – Equities extended its rally as the Dow Jones jumped 2.51% to 34,059 points, the S&P 500 surged 2.24% to 4,385, and the Nasdaq techheavyweight up 1.64% to 13,695 points. The benchmark UST 10-years yield declined 0.1bps to 1.962%.

Euro – Due to the weaker dollar, the euro rose 0.68% to 1.127. On the data front, the economic sentiment indicator increased to 114 in February, beating market forecasts of 113.1, as many coronavirus-related restrictions were lifted in Europe during the month.

British pound – The pound climbed 0.22% to 1.341. The latest data showed that the GfK Consumer Confidence survey in the United Kingdom dropped to its lowest level in 13 months at -26 in February 2022, as consumer mood was dampened by persistently high inflation, from -19 in the previous month, much worse than the market forecast of a -18 improvement.

Japanese yen – The yen ended the week on weaker note as it depreciated slightly by 0.02% to 115.5.

Chinese yuan – The yuan strengthened 0.18% to 6.318, standing out compared to other major currencies for its resilience amidst the Russian invasion.

Korean won – The won was on the stronger footing as well as it appreciated 0.06% to 1,201.72.

Australian dollar – The Aussie dollar went up by a much as 0.88% to 0.723 as risk sentiment improved. The currency also benefitted from rising commodities prices as Australia is a net energy exporter country.

Commodities Highlights

Crude oil – After days of surging, oil prices dipped on Friday as market players were concerned on potential global supply disruptions from sanctions on major crude exporter Russia. Brent fell 1.16% to US$98 per barrel while WTI lost 1.31% to US$92 per barrel.

Gold – Gold prices declined 0.76% to US$1,889/oz on Wednesday.

Malaysia Highlights

Malaysian ringgit – The ringgit strengthened slightly by 0.02% to 4.202 after weakening significantly in previous session. We also saw it being traded within a narrower range of 4.203–4.1943.

KLSE – The FBM KLCI shot up 1.13% to 1,592 rebounding from recent drops. Detailed transactions showed that foreign investors were net buyers with RM265.9mil position, while local institutions and retailers were net sellers.

Fixed Income – The local bond market was quiet as the only changes seen were on the 7-years benchmark as it +1.0bps to 3.600%. For 3-years, 5-years and 10-years, it remained unchanged at 2.695%, 5-years at 3.300%, and 10- years at 3.670%.

Rates – The IRS yield curve shifted higher as the (3Y) +0.5bps to 2.910%, (5Y) +1.3bps to 3.175%, (7Y) +1.0bps to 3.360%, and (10Y) +0.5bps to 3.550%. KLIBOR was unchanged at 1.970%.

Against major currencies – The ringgit closed mixed as it appreciated vs. the EUR, GBP, JPY, and SGD but depreciated vs. the AUD, CNY, THB, IDR, and VND but unchanged against the PHP.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1930 and 4.1960 while our resistance is pinned at 4.2120 and 4.2150

Source: AmInvest Research - 28 Feb 2022