• US consumer inflation expectation continues to increase in March 2022

• UK economy grew at a slower pace in February 2022

Global Highlights

Dollar Index – The greenback posted a 0.14% increase to trade around 99.932. The consumer inflation expectation continued to increase, where the latest reading as of March 2022 was 6.6%, higher than the previous month of 6.0%. This was the highest reading recorded in the past 12 months, suggesting that despite expectations of an aggressive monetary policy tightening, consumers are still expecting prices to increase in the months to come.

US equities – Wall Street was in the red with the Dow Jones down 1.19% to 34,308, the S&P 500 falling 1.69% to 4,413 and the Nasdaq dropping 2.18% to 13,412. The benchmark UST10-year yield added 8.0bps to 2.780%.

Euro – The euro edged higher by 0.06% to 1.088. The World Bank expects the Russian and the Ukrainian economies to shrink significantly due to the conflict between those countries. The Ukrainian economy is expected to shrink by 45.1%, and the Russian economy by 11.2%. This will have spillover effects on their European neighbours through trade shocks.

British pound – The pound gained 0.04% to 1.303. The UK economy grew by 0.1% in February 2022, which was slower relative to the previous month’s growth of 0.8%. The main reason for the slowdown was related to supply chain delays and slower construction activity. Going forward, the effects from Brexit, Russia-Ukraine conflict, and higher prices among producers and consumers are expected to dampen growth prospects in the UK.

Japanese yen – The yen was traded 0.83% weaker at 125.37. The Bank of Japan revised down its assessment for most regional economies due to the high uncertainty surrounding the Russia-Ukraine conflict that will affect the Japanese economy.

Chinese yuan – The yuan slid 0.08% to 6.370. China’s inflation increased more than expected to 1.5% y/y after staying unchanged at 0.9% y/y for the past two months. The main reason for the higher inflation was higher oil and food prices. Beijing’s zero-Covid policy is expected to put pressure on manufacturers where they are already struggling to operate on a normal basis, and this could push them to hike prices.

Korean won – The won depreciated by 0.68% to 1,233. South Korea’s exports were up 3.0% in the first 10 days of April. This was due to higher demand for computer chips and petroleum products. Issues such as supply chain disruptions and higher input and output costs are still the main concerns that traders are facing at the moment due to the situation in Europe and China.

Australian dollar – The Aussie dollar shed 0.55% to 0.742. Australia will hold a general election on 21 May 2022, and the focus of the election will be mainly related to cost of living as prices continue to increase and climate change.

Commodities Highlights

Crude oil – Brent declined 4.18% to US$98.48 per barrel and WTI fell 4.04% to US$94.29 per barrel.

Gold – The gold price rose 0.31% to US$1,954/oz, the highest level in two weeks.

Malaysia Highlights

Malaysian ringgit – The ringgit shed 0.22% to 4.231. On the macro front, Malaysia’s industrial production was up 3.9% y/y in February 2022. Growth was mainly contributed by the expansion in the manufacturing sector, which increased by 5.2% y/y, followed by 3.9% in the electricity sector. The mining sector however, declined by 0.4% y/y. Expansion is expected to continue for the next several months as suggested by the latest PMI numbers. However, businesses have cited that higher input and output costs should be expected.

KLSE – The FBM KLCI inched down 0.17% to 1,605 driven by net buying from local retailers and foreign investors at RM52.1mil and RM0.4mil respectively. Local institutions were net sellers at RM52.5mil.

Fixed Income – The MGS benchmark for the 3-year was up 7.5bps to 3.275%, 5-year +5.5bps to 3.525%, 7-year +6.0bps to 3.915%, and 10-year +4.0bps to 4.050%.

Rates – The IRS yield curve shifted upwards with the (3Y) +11.0bps to 3.295%, (5Y) +16.5bps to 3.700%, (7Y) +3.0bps to 3.730%, and (10Y) +9.5bps to 4.085%.

Against major currencies – The ringgit lost against the EUR, GBP, AUD, CNY, SGD, THB, and IDR, but gained against the JPY and PHP. The ringgit was unchanged against the 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 4.2300 and 4.2330.

Source: AmInvest Research - 12 Apr 2022