• US releases strategic reserve to cool red-hot oil market

• MYR to fluctuate between 4.1880 and 4.2170 against the USD

Global Highlights

Dollar Index – The greenback rebounded as it gained 0.53% to 98.312, boosted by safe-haven demand as hopes for a ceasefire in the UkraineRussia war diminished with Russian forces accumulating in Ukraine’s eastern region. The Dollar Index was up 1.66% compared to end-February. On the data front, US personal spending increased by 0.2% m/m in February of 2022 (cons.: +0.5%) but much slower than the 2.7% surge in January, while personal income rose 0.5% m/m following a 0.1% m/m growth in January.

US equities – Wall Street closed in the red when the Dow Jones fell 1.56% to 34,678, S&P 500 lost 1.57% to 4,530, while the Nasdaq slid 1.54% to 14,221. The UST benchmark 10-year yield climbed 1.1bps to 2.338%.

Euro – The euro shed 0.82% to 1.107 and is set to end the month 1.35% lower versus end-February. As European countries tried to break from their dependence on Russian energy, President Vladimir Putin threatened to halt contracts supplying Europe unless they are paid in ruble as a retaliation against sanctions imposed on Russia so far. For a start, Germany has triggered emergency plan where it must ration its power usage if the natural gas halt does materialize. The unemployment rate in the Euro Area fell to a record low of 6.8% in February of 2022 from an upwardly revised 6.9% in January and from 8.2% in February 2021, but above market forecasts of 6.7%.

British pound – The pound gained slightly by 0.03% to 1.314. Throughout the month of March, the currency has lost as much as 2.10%. The British economy grew 6.6% y/y in 4Q21, according to the final GDP report. It was slightly below than the 6.9% growth in 3Q despite the spread of the Omicron variant. For the full year of 2021, the British economy advanced 7.4% y/y, slightly lower than initial estimates of 7.5%, and rebounding from a 9.3% contraction in 2020. It is now at 0.1% below the pre-pandemic level.

Japanese yen – The yen strengthened for the third consecutive session. It firmed 0.11% to 121.70 but remained the biggest loser among major currencies with a decline of 5.83% from end-February. Traders are now on the lookout for authorities’ intervention in response to the recent bear shock. Industrial production in Japan rose 0.2% year-on-year in February 2022, turning positive after a 0.5% decline in January as growing production in cars and transport equipment offset a decline in chemicals.

Chinese yuan – The yuan appreciated 0.12% to 6.340. On a monthly basis, the currency weakened by about 0.49%, but remained near its strongest level since 2018. The signal for further policy support by the government is getting louder with both manufacturing and non-manufacturing PMI dipping below previous readings. The official report by the National Bureau of Statistics (NBS) showed that the manufacturing PMI fell to 49.5 while the non-manufacturing PMI dropped to 48.4, the first contraction for both after few months.

Korean won – The won depreciated 0.18% to 1,211.93, 0.80% lower compared to the end of February. The Business Survey Index (BSI) showed that business conditions in the manufacturing sector deteriorated to 83 in March 2022 (Feb 2022: 91) while retail sales grew slower at 1.6% y/y (Feb: 4.7%). Meanwhile, industrial output rose faster at 6.5% y/y (Feb: 4.2%) and manufacturing production expanded by 6.2% y/y (Feb: 4.3%).

Australian dollar – The Aussie dollar was down 0.36% to 0.748, mirroring the decline in the oil market. However, it outperformed other major currencies, posting a 3.02% m/m growth by the end of March. The total housing approved surged to a record peak of 43.5% m/m growth in February 2022, easily beating market estimates of a 10% gain.

Commodities Highlights

Crude oil – Amidst Putin’s insistence on receiving rouble as its natural gas payment, the US government took a step in cooling down the oil market as President Joe Biden announced that his administration will release 1 million barrels of oil per day from reserves for the next six months, a move which many considered as unprecedented. Brent tumbled 4.88% to US$107 per barrel, while WTI nose-dived 6.99% to US$100 per barrel.

Gold – Gold was traded 0.24% higher at US$1,937/oz, the highest level this week.

Malaysia Highlights

Malaysian ringgit – The ringgit strengthened slightly by 0.01% to 4.204 and traded within the range of 4.2073 and 4.2015. Local data showed that money supply M3 in Malaysia grew 6.8% to RM2.178 trillion in January 2022 from RM2.171 in December 2021.

KLSE – The FBM KLCI ended 0.26% higher at 1,587 with REITs and telecommunication & media the biggest gainers. Detailed transactions showed that foreign investors were net buyers with RM 102.6mil, while being offset by the net selling outflow from local institutions at RM72.0mil and local retailers at RM30.5mil.

Rates – The IRS yield curve shifted lower with the (3Y) -4.0bps to 3.075%, (5Y) -6.5bps to 3.360%, (7Y) -7.0bps to 3.540%, and (10Y) -7.0bps to 3.770%. KLIBOR was unchanged at 1.970%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.1850 and 4.1880 while our resistance is pinned at 4.2170 and 4.2200.

Source: AmInvest Research - 1 Apr 2022