• ECB ends asset purchase programme earlier

• MYR to fluctuate in the range of 4.1730 and 4.1950 against the USD

Global Highlights

US dollar – The greenback rose 0.57% to 98.529 following the consumer price report. Data showed that inflation rate surged 7.9% in February, the highest level since 1982, but within the market’s expectation and up from 7.5% the month before. On the geopolitical front, talks between Russia and Ukraine failed, with foreign ministers from both countries making no progress on a potential ceasefire agreement.

US equities – Wall Street turned red across the board when the Dow Jones fell 0.34% to 33,174, S&P 500 lost 0.43% to 4,260 and the Nasdaq dropped 0.95% to 13,130. The benchmark UST10-year yield extended its climb as it added 3.3bps to 1.986% amidst an imminent Fed tightening next week.

Euro – The euro made some gains in early sessions after the European Central Bank (ECB) meeting, but later lost its ground to the dollar. On daily changes, the euro fell 0.81% to 1.099 During its latest meeting, the ECB decided to maintain its interest rate, specifically, the rate on the main refinancing operations a marginal lending facility and deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. However, the ECB is ending its asset purchase programme in the third quarter, if “economic data allows it”. The monthly net asset purchases would amount to €40 billion in April, €30 billion in May and €20 billion in June.

British pound – The pound lost 0.72% to 1.309. The UK’s starting salaries for permanent staff recorded a record increase in February 2022, underpinning the shortage of candidates. This will further pressure the BoE to raise interest rate during its meeting next week to prevent wage-price spiral phenomenon.

Japanese yen – The yen depreciated 0.27% to 116.14, almost breaking the lowest level since 2017.

Chinese yuan – The yuan eased slightly 0.07% but remained near around 6.322 level.

Korean won – The won pared previous gains as it depreciated 0.48% to 1,228.34.

Australian dollar – The Aussie dollar climbed 0.49% to 0.736. The seasonally adjusted estimate for total building permits approved dropped 27.9% m/m in January 2022.

Commodities Highlights

Crude oil – Oil prices extended its drop for the second consecutive session as Russia pledged to fulfil contractual obligations on energy supplies. Also, OPEC and Chevron said that there would be no shortage of oil while Iraq also stated that there was no need to ramp up output more than planned. Brent fell 1.63% to US$109 per barrel while WTI dropped 2.47% to US$106 per barrel.

Gold – Gold increased by 0.26% to US$1,996/oz.

Malaysia Highlights

Malaysian ringgit – The local currency ringgit weakened 0.04% to 4.188 and was traded within the high of 4.1897 and low of 4.181.

KLSE – The FBM KLCI was green for the second straight day as it jumped 1.16% to 1,581. Detailed transactions showed that again both local retailers and foreign investors were net buyers with RM17.2 and RM172.5mil respectively, offset by net selling from local institutions at RM189.8mil.

Fixed income – The benchmark yield curve in local bond market steepened when the 3-year at -2.0bps to 2.670%, and 5-year -1.0bps to 3.290%, but the 7-year and 10-year remained unchanged at 3.545% and 3.675%, respectively.

Rates – The IRS yield curve shifted upwards as well with the (3Y) +4.0bps to 2.895%, (5Y) +2.5bps to 3.140%, (7Y) +2.5bps to 3.350%, and (10Y) + 1.0bps to 3.550%. KLIBOR remained flat at 1.970%.

Against major currencies – The ringgit had the upper hand against the JPY, CNY and THB but weakened against the EUR, GBP, AUD, SGD, IDR, SGD, PHP and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1700 and 4.1730 while our resistance is pinned at 4.1950 and 4.1980.

Source: AmInvest Research - 11 Mar 2022