• Dollar breaches 100-level amidst shorter working week

• MYR to fluctuate between the range of 4.2330 and 4.2550 against USD

Global Highlights

Dollar Index – The greenback inched higher on Friday by 0.18% and traded around 100.50 by the end of the week. Industrial production in the US increased 0.9% m/m in March 2022, much higher than the market’s expectation of 0.4% growth in February. For now, the fallout effects from the worsening global supply chain due to the Ukraine-Russia war and China’s Covid-related lockdowns seemed muted. Also, Philadelphia Fed president Patrick Harker emphasized his view that the US central bank will raise the interest rate to contain the "far too high" inflation.

US equities – Wall Street was closed on the Good Friday holiday ahead of Easter Sunday on 17 April.

Euro – The euro edged 0.17% lower to 1.081, touching its lowest level since May 2020. The ECB said that any adjustments to interest rates will take place sometime after the end of the asset purchase programme which should be concluded in the third quarter.

British pound – The pound also dipped, down 0.08% to trade around 1.306.

Japanese yen – The yen weakened again by 0.46% to 126.46, hitting a fresh 20-year low as the Bank of Japan’s firm commitment to maintain ultra-easy policies contrasted sharply with other major central banks that have started normalizing monetary settings. Finance Minister Shunichi Suzuki said that the rapidly weakening yen can cause problems for Japan's economy, heightened speculations that Tokyo will step in to curb the currency's weakening shock for the first time in more than two decades.

Chinese yuan – The yuan strengthened 0.11% to 6.372. On Friday, the People's Bank of China (PBoC) said on its website that it would cut the reserve requirement ratio (RRR) for all banks by 25bps, effective 25 April, releasing liquidity of about 530 billion yuan (US$83.25 billion). The weighted average RRR for financial institutions will be lowered to 8.1% after the cut. On the data front, average new home prices in China's major cities rose by 1.5% y/y in March 2022, below the 2.0% gain a month earlier. This was the weakest rise in new home prices since November 2015.

Korean won – The won depreciated 0.43% to 1,229 as South Korea said it will drop most Covid-19 pandemic-related restrictions except the mask-wearing regulation as soon as next week as Omicron cases are showing signs of decreasing. Meanwhile, in its first-ever rate review held without a governor on Thursday, the Bank of Korea raised its base rate by 25bps to its highest since August 2019 of 1.50% to tame surging inflation.

Australian dollar – The Aussie dollar tilted to the downside as it slid 0.32% to 0.740. Australia's new home sales rose 3.9% m/m in March 2022, up from a 7% contraction in the previous month.

Commodities Highlights

Crude oil – Worries in the oil market remained with EU countries drafting a phased ban on Russian oil imports. Due to Easter’s shorter working week, Brent was unchanged at US$111.7 per barrel while WTI was at US$107.0 per barrel.

Gold – Gold climbed 0.23% to US$1,978, the highest level since mid-March 2022.

Malaysia Highlights

Malaysian ringgit – The ringgit weakened 0.09% to 4.236, a level we have not seen since last November. It traded within the range of 4.2365 and 4.2327. On a side note, after just two weeks the application for EPF withdrawal opened, the EPF said that it has received as many as 5.3 million applications, for a total withdrawal of RM40 billion.

KLSE – The local bourse fell 0.42% to 1,589 as all sectors were in the red. Detailed transactions showed that local retailers and foreign investors were net buyers at RM16.4mil and RM12.6mil respectively, while being offset by local institutions’ net outflow of RM29.0mil.

Fixed income – The local bond market saw the benchmark yield curve climbing with the 3-year +4.5bps to 3.350%, 5-year +5.0bps to 3.570%, 7-year +7.0bps to 4.000% and 10-year +8.0bps to 4.120%.

Rates – The IRS yield curve also shifted upwards with the (3Y) +3.0bps to 3.265%, (5Y) +6.0bps to 3.640%, (7Y) +2.0bps to 3.810%, and (10Y) +6.0bps to 4.060%. KLIBOR still unchanged at 1.970%.

Against major currencies – The ringgit was up against the EUR, GBP, AUD, JPY, SGD, and IDR but depreciated against the CNY, THB, and VND but unchanged vs. the PHP.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.2300 and 4.2330 while our resistance is pinned at 4.2550 and 4.2580.

Source: AmInvest Research - 18 Apr 2022