• Dollar continues to shine amidst extended geopolitical tension

• MYR to fluctuate in the range of 4.1780 and 4.1950 against USD

Global Highlights

Dollar index – The greenback rebounded as it surged 0.41% to 97.785 after Fed chair Jerome Powell’s Senate hearing last night. The Fed’s tightening cycle looms after he pointed to a 25bps rate hike in March with the possibility of a more aggressive move. Among local data, the ISM Services PMI fell to 56.5 in February of 2022 below January’s 59.9 and the market’s forecast of 6, which marked the slowest growth in a year. The weekly indicator, the number of new claims for unemployment benefits shrank to 215K last week from 233K. It is the lowest number since the start of the year.

US equities – With no support on Wall Street, the Dow Jones fell 0.29% to 33,795, S&P 500 declined 0.53% to 4,363, while the Nasdaq lost 1.56% to 13,358 points. Market players now await tonight’s non-farm payrolls data for further clues on the US labour market. The benchmark UST 10-years dropped 3.6bps to 1.841% after a sharp rebound after Powell’s reassurance of tightening.

Euro – The euro remained on the losing side as it slid 0.47 % to 1.106, the lowest level since May 2020, outweighed by the Ukraine-Russia tension and an uncertain ECB’s policy path after the Eurozone’s inflation set a new record high. Also, data showed that the unemployment rate recorded another new low of 6.8% in January 2022, much lower than December’s 7.0% as the labour market recovery was supported by easing Omicron restrictions. On another note, the EU said that the region is ready in case Russia decides to cut off gas supplies to the bloc.

British pound – The pound dropped 0.43% to 1.335 as traders assessed the Eastern Europe tension. The CIPS/Markit Services PMI showed that the services sector’s growth accelerated sharply as the headline figure jumped to 60.5 in February from 54.1.

Japanese yen – The yen appreciated slightly by 0.05% to 115.46. The Consumer Confidence Index in Japan declined to a 9-month low of 35.3 in February 2022 from 36.7 in the previous month, as Covid-19 restrictions were extended in some regions.

Chinese yuan – The yuan firmed 0.01% to 6.320 amidst the annual parliamentary gathering.

Korean won – The won appreciated 0.11% to 1,204.7. Final local data showed that South Korea’s economy grew 4.2% y/y, higher than consensus’ 3.7%. For the full year of 2021, the economy expanded at the fastest pace in 11 years at 4% y/y.

Australian dollar – The Aussie dollar rose 0.44% to 0.733, extending its winning streak due to soaring commodities prices. Australia's trade surplus increased to A$12.9bil in January 2022 from A$8.8bil in the previous month.

Commodities Highlights

Crude oil – Hopes of extra supply from Iran were renewed as the US and Iran are believed to be in final talks in completing the deal. Brent slid 2.19% to U$110 per barrel while WTI lost 2.65% to US$107 per barrel.

Gold – Gold remained attractive amidst heightened volatility as it rose 0.37% to US$1,935/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit was strong as it appreciated by 0.15% to 4.188 amid geopolitical uncertainty, boosted by rising oil and crude palm oil prices. It was traded within the range of 4.1923 and 4.1858. The BNM MPC decided on Thursday that it will maintain the current overnight policy rate (OPR) at a record low of 1.75%,

KLSE – The local bourse’s FBM KLCI soared 1.28% or 20.4 pts to 1,619. Detailed transactions showed that both local retailers and foreign investors were net buyers with RM36.3mil and RM136.5mil respectively, offset by the

local Institutions’ Net Buying of RM172.9mil.

Fixed Income – The local MGS benchmark yields were mixed as the 3-year +1.0bps to 2.710%, 5-year +2.5bps to 3.280%, and 10-year +0.5bps to 3.670% but the 7-year -1.0bps to 3.510%.

Rates – The IRS yield curve was mixed as well as the (3Y) +0.5bps to 2.865%, (5Y) +1.1bps to 3.135%, and (10Y) +0.5bps to 3.550%, and (7Y) remained at 3.335%. KLIBOR was unchanged at 1.970%.

Against major currencies – The ringgit was on the front foot against the EUR, JPY, CNY, SGD, THB, IDR, PHP, and VND but weakened against the GBP and AUD.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1750 and 4.1780 while our resistance is pinned at 4.1950 and 4.1980.

Source: AmInvest Research - 4 Mar 2022