• Fed Governor Lael Brainard set a more hawkish tone, saying the Fed will continue tightening its monetary policy through a series of interest rates increases.

Global Highlights

Dollar Index – The Dollar Index was up 0.48% to 99.472. In a recent speech, Fed Governor Lael Brainard set a more hawkish tone, saying that the Fed will continue tightening its monetary policy through a series of interest rates increases and will start reducing its balance sheet at a rapid pace as soon as May. We are expecting a 50bps hike in the next meeting.

US equities – US stocks were in red with the Dow Jones down 0.80 % to 34,641, S&P 500 down -1.26% to 4,525, and the Nasdaq down 2.26% to 14,204. On US Treasuries, the spread between the 10Y and 2Y was around 3.30bps.

Euro – The euro was down 0.61% to 1.091. The manufacturing sector signalled a further expansion in March, where the PMI slightly dipped from 55.5 in February 2022 to 54.9 in March 2022. The survey cited that output expansion slightly deteriorated, with Germany experiencing the biggest drop, and price pressure remains high in the Euro Area.

British pound – The pound down 0.32% to 1.307. The UK services PMI rose from 60.5 in February 2022 to 62.6 in March 2022, signalling further expansion in the sector. This was due to the removal of restriction that relates to COVID- 19. However, the survey also points out that costs bear by companies increased, which could dampen outlook for the UK’s economy in the months to come.

Japanese yen – The yen down 0.66% to 123.600. The Bank of Japan Governor Haruhiko Kuroda warned that the yen’s recent depreciation was rapid and could hurt the economy due to high reliance on imports. He however, maintained his view that weak yen is benefitting the economy as it will push inflation closer to the 2.0% target.

Chinese yuan – The yuan was unchanged at 6.363. Lockdown in major cities such as Shanghai continued to dominate the news on China. With no sign of lifting some restrictions due to its zero-COVID-19 policy, it is evident that the Chinese government’s growth target of 5.5% this year will be tougher to be met.

Korean won – The won gained 0.14% to 1212.700. On the macro front, South Korea’s inflation jumped to 4.1% in March 2022, the highest reading since August 2011 with 4.7% y/y. Main impetus for the high inflation number was energy-related, which increased by 31.2% y/y, reflecting to the high commodities prices globally. Core inflation also jumped to 3.8% y/y, and all of these are putting pressure for the Bank of Korea to make more adjustment on its monetary policy stance.

Australian dollar – The Aussie dollar gained 0.48% to 0.758. The Reserve Bank of Australia (RBA) kept the interest rates at the current level of 0.1%. The central bank has signalled that they may adjust the interest rates soon if latest inflation numbers and wages growth outpaced expectation.

Commodities Highlights

Crude oil – Brent was down 0.83% to US$106.64 per barrel and WTI also lost 1.28% to US$101.96 per barrel.

Gold – Gold shed 0.47% to US$1,923.60 per oz.

Malaysia Highlights

Malaysian ringgit – The ringgit gained 0.26% to 4.209. The World Bank revised its forecast for Malaysia’s growth from 5.8% to 5.5% for 2022. The economy will be supported by recovery in domestic demand, strong exports, and reopening of the international borders. Main reason for the downgrade was related more to the external fronts, including the Russia-Ukraine conflict, financial tightening in the US, and slowdown in China. We are maintaining our expectation that the economy to grow by 5.6% (base case) this year, with the downside of 4.8%

KLSE – The FBM KLCI closed 0.13% lower at 1,597. Detailed transactions showed that local institutions and local retails were net sellers with RM46.4mil and RM16.5mil respectively, while foreign investors were net buyers with RM62.9mil.

Fixed Income – The local bond market was lackluster as the yield curve steepened slightly with the falling of shorter term. The benchmark 3-year - 2.0bps to 3.190%, 5-year -0.5bps to 3.430%, while the 7-year and 10-year remained unchanged at 3.815% and 3.935%, respectively.

Rates – The IRS yields for the (3Y) was down by 2.5bps to 3.105%, (5Y) down 2.5bps to 3.420%, (7Y) up 2.0bps to 3.625%, and (10Y) down 1.0bp to 3.830%. KLIBOR remained at 1.970%.

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

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 - 6 Apr 2022