• Risk-on sentiment recovers with progress made in Ukraine-Russia talks

• MYR to fluctuate in the range of 4.1950 and 4.2170 against the USD

Global Highlights

Dollar index – The Dollar Index inched higher by 0.10% to 99.097 as investors saw some potential improvement in the Ukraine-Russia war, which provided some recovery for risk-on sentiment. Based on local data, producer prices in the US increased 0.8% m/m in February 2022, slower than the 1.2% rise in January, and slightly below market forecasts of 0.9%. On a yearly basis, it rose 10%, the same pace as the previous month.

US equities – Wall Street turned green as the Dow Jones surged 1.82% to 33,544, S&P 500 jumped 2.14% to close at 4,262, while the Nasdaq soared 2.92% to 12,949. The UST10-year benchmark yield added 1.1bps to 2.144%.

Euro – The euro added 0.15% to 1.096. Efforts to end the Russia-Ukraine war continued as officials from both sides made some progress from their talks on Monday. On the data front, industrial production contracted 1.3% y/y in January, down from a 2% jump (cons. -0.5%). Also, the ZEW Indicator of Economic Sentiment tumbled to -38.7 in March, significantly below 48.6 (cons. 10.7), which marked the lowest reading since March of 2020.

British pound – The pound climbed 0.31% to change hands at 1.304. Reports showed that the unemployment rate fell to 3.9% in the three months to January 2022, the lowest in two years. While the number of people claiming unemployment benefits dropped 48.1K in February.

Japanese yen – The yen eased slightly by 0.09% to 118.30. Nonetheless, as the sentiment was partly boosted by Prime Minister Fumio Kishida’s government decision on Wednesday on the possible lifting of the Covid-19 quasi-state of emergency on 21 March.

Chinese yuan – The yuan depreciated 0.08% to 6.371, the weakest level since November 2021, as market players anticipated decisions from the Fed meeting and sour sentiment in the market as there were fresh Covid lockdowns in several regions which had halted some business operations and rekindled global supply chains concerns. Also, the PBoC disappointed the market as it kept the MLF loans to financial institutions unchanged at 2.85% in its liquidity operation on Tuesday despite the slowing growth.

Korean won – The won similarly shed 0.08% to 1,242, amidst stronger dollars.

Australian dollar – The Aussie dollar gained 0.11% to 0.720. The RBA meeting minutes showed that the board is prepared to hold off its normalization plan with the high uncertainty from the Ukraine-Russia war on the Australian economy.

Commodities Highlights

Crude oil – Global oil prices extended their downtrend amidst ongoing ceasefire talks between Russia and Ukraine. Also, the region-wide lockdowns in China due to rising Covid cases could dampen demand for oil. Brent nose-dived 6.54% to US$99 per barrel while the WTI tumbled 6.38% to US$96 per barrel.

Gold – The gold price was also on the downside as the risk-off sentiment diminished and the expectation of the Fed rate hike move this week. It dropped 1.69% to US$1,917/oz.

Malaysia Highlights

Malaysian ringgit – The local currency ringgit depreciated slightly by 0.01% to 4.207, weakening for the sixth consecutive day. It was traded within the range of 4.2115 and 4.206.

Fixed income – The MGS benchmark yields surged upwards as the 5-years +2.0bps to 3.320%, 7-years +3.0bps to 3.580%, and 10-years +0.5bps to 3.690%.

KLSE – The FBM KLCI fell 0.64% to 1,557. Detailed transactions showed that local retailers and foreign investors were net buyers with RM9.3mil and RM272.2mil, respectively, but offset by the net selling from local institutions with RM281.5mil.

Rates – The IRS yield curve flattened as the (3Y) +0.5bps to 2.940%, (5Y) +1.0bps to 3.185 but the (7Y) and (10Y) remained flat at 3.375% and 3.590%.

Against major currencies – The ringgit was firmer against the GBP, AUD, JPY, CNY, SGD, THB, and VND, but lower against the EUR, IDR, and PHP.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1920 and 4.1950 while our resistance is pinned at 4.2170 and 4.2200.

Source: AmInvest Research - 16 Mar 2022