• Fed makes first rate hike; shrinking of balance sheet to start in coming meeting.

Global Highlights

Dollar Index – The Dollar Index weakened 0.48% to 98.618, as the Fed made the first rate hike in the latest meeting. Based on its statement, the FOMC now anticipates that ongoing increases in the target range will be appropriate and the process of shrinking its balance sheet will commence in the next meeting in May.

US equities – US stocks closed higher, where the Dow Jones gained 1.55% to 34,063, S&P 500 up 2.24% to 4,358, and the Nasdaq climbed 2.92% to 12,949. Market sentiment was dominated by the Fed’s first interest rate adjustment, and now the market is anticipating that the Fed will continue to tighten in its following meetings.

Euro – The euro gained 0.15% to 1.096. In her latest speech, European Central Bank president Christine Lagarde said that the Eurozone economy is still set for robust growth this year, despite the situation in Ukraine that pushed up commodity prices.

British pound – The pound weakened 0.27% to 1.300. On the macro front, the Bank of England’s monetary policy meeting will be held later today, where another rate hike is likely to be implemented in order to keep price pressure from elevating further.

Japanese yen – The yen slid 0.09% to 119.300. On the macro front, Japan exports rose by 19.1% y/y in February 2022, higher than the 9.6% increase in the prior month. Despite the impressive numbers, there were signs that the Japanese economy faces growing uncertainty from supply chain issues following Russia's invasion of Ukraine, and China imposing a lockdown in one of its major cities.

Chinese yuan – The yuan shed 0.28% to 6.353. China’s Vice-Premier Liu He said that the government will actively release policies favourable to markets and make sure that any regulation that could have a significant impact on capital markets would be coordinated with the financial regulatory authorities, in response to slower growth prospects.

Korean won – The won gained 0.08% to 1,243. The unemployment rate in South Korea fell from 3.6% in January 2022 to 2.7% in February 2022. This was the lowest reading since the pandemic, and the improvement was mainly due to government fiscal assistance on welfare and jobs.

Australian dollar – The Aussie dollar slid 0.11% to 0.720. Earlier, Australia announced almost AU$500mil in funding to boost output of critical minerals. The aim is to diversify supply in response to the trade dispute with China last year.

Commodities Highlights

Crude oil – Oil prices were trading lower relative to past week’s trend. Brent price declined 6.54% to US$100 per barrel and WTI also fell 1.45% to US$95 per barrel .

Gold – Gold gained 0.49% to US$1,927 per oz.

Malaysia Highlights

Malaysian ringgit – The ringgit gained 0.21% to 4.198.

KLSE – The FBM KLCI closed 0.89% higher at 1,571.

Fixed Income – The yield for the 3-year was up by 0.5bps to 2.680%, 5-year down 1.0bps to 3.310%, the 7-year down 2.0bps to 3.560%, and the 10-year unchanged at 3.690%.

Rates – The IRS yields were mixed; the (3Y) -0.5bps to 2.935%, (5Y) unchaged at 3.185%, (7Y) unchanged at 3.375%, and (10Y) unchanged at 3.590%. KLIBOR Remained at 1.970%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1800 and 4.1830 while our resistance is pinned at 4.2070 and 4.2100.

Source: AmInvest Research - 17 Mar 2022