• Most PMI surveys suggest that high input costs and output inflation dampening business’ confidence moving forward

Global Highlights

Dollar Index – The Dollar Index was up 0.17% to 98.789. On the macro front, initial jobless claims fell by 28K to 187K in the week ended 18 March 2022. This was the lowest reading since 6 September 1969 as more workers are now employed, suggesting that the labour market is tight.

US equities – US stocks ended higher with the Dow Jones gaining 1.02% to 34,708, S&P 500 up 1.43% to 4,502, and the Nasdaq rose 1.93 % to 14,192. The recent initial jobless claims were promising as the numbers declined to the lowest level since the pandemic. However, new orders for manufactured goods dropped due to supply bottlenecks and the Ukraine situation. On US Treasuries, the spread between the 10Y and 2Y was around 0.2%.

Euro – The euro declined 0.06 % to 1.100. The latest PMI flash estimate for the Eurozone dropped from 55.5 in February 2022 to 54.5 in March 2022. The numbers continued to be expansionary as Covid-19 restrictions were relaxed. However, confidence has yet to be restored due to the situation Ukraine that could push commodity prices and input costs higher.

British pound – The pound slid 0.43% to 1.321. On the macro front, the CBI Distributive Retail Sales Survey in the UK dipped further in March 2022. The main reason for the decline was higher costs of living which eroded consumers’ power of purchasing. Recently, the UK’s inflation number was reported to be at 6.2% y/y on the back of higher energy prices.

Japanese yen – The yen lost 0.99 % to 122.350. BoJ board member Goushi Kataoka recently said that the Japan’s consumer prices may increase and stay close to the BoJ’s inflation target of 2% for a long period if the Ukraine war continues to drag, which drives commodity prices higher. However, this means that price pressure is driven by external factors and not domestic demand, hence the BoJ has no reason to tighten its monetary policy.

Chinese yuan – The yuan shed 0.10% to 6.372. The Chinese economy continued to battle the spread of Covid-19, and the authorities maintained its stance on the zero-tolerance policy in keeping confirmed cases low. Recently, Shanghai, which is one of China’s major commercial hubs, reported a confirmed case of close to 1,000. This could mean that economic activity in China will remain low and could have a spillover effect on its domestic and the global economy.

Korean won – The won was up 0.37 % to 1213.78. The newly appointed Bank of Korea governor Rhee Chang-yong promised to balance the central bank’s monetary stance in dealing with slower economic growth and inflation risks. Uncertainty mainly lies in the Russia-Ukraine crisis, which could dampen growth prospect and push prices higher, and policy normalisation in major central banks, including the Fed.

Australian dollar – The Aussie dollar gained 0.19% to 0.751. The PMI flash estimate showed that the reading increased from 56.6 in February 2022 to 57.1 in March 2022. The number suggested a continued expansion due to less stringent Covid-19 restrictions. But most businesses cited that input costs and output price inflation continued to surge in March 2022.

Commodities Highlights

Crude oil – Brent was down 2.1% to US$119.03 per barrel and WTI also tumbled 2.25% to US$112.34 per barrel.

Gold – Gold was up 0.71% to US$1,957.69 per oz.

Malaysia Highlights

Malaysian ringgit – The ringgit weakened 0.02% to 4.225.

KLSE – The FBM KLCI closed 0.76% higher at 1,598. Detailed transactions showed that local retailers and foreign investors were net buyers with RM15.2mil and RM176.5mil respectively, while local institutions were net sellers With RM191.7mil.

Fixed Income – The yield for the 3-year was up by 2.0bps to 2.740%, 5-year unchanged at 3.405%, the 7-year up +4.0bps to 3.700%, and the 10-year up 3.0bps to 3.820%.

Rates – The IRS yields for the (3Y) remained 3.075%, (5Y) up +2.0bps to 3.370%, (7Y) remained at 3.580%, and (10Y) up +2.0 to 3.810%. KLIBOR remained at 1.970%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.2000 and 4.2030 while our resistance is pinned at 4.2500 and 4.2530

Source: AmInvest Research - 25 Mar 2022