• Greenback slides while cyclical currencies appreciate

Global Highlights

Dollar Index – The greenback continued its falling trend as it declined 0.16% to 101.68, the lowest level for more than a month. Personal spending in the US grew 0.9% m/m in April, slower than the 1.4% growth in the previous month (cons.: 0.7%), signaling robust spending amidst high inflation. On the other side of the equation, personal income only grew by 0.4% m/m. Meanwhile, consumer sentiment continued to deteriorate as it fell to its lowest since August 2011 at 58.4, from 65.2 in the previous month, according to a University of Michigan survey.

US equities and sovereign bonds – Wall Street closed higher with Dow Jones climbing 1.76% to 33,213, S&P 500 surging 2.47% to 4,158, and tech heavyweight Nasdaq jumping 3.33% to 12,131. The UST10Y benchmark yield slid 0.9bps to 2.738%, while the UST2Y yield stood at 2.476%, making the yield spread UST10/2 decreasing slightly to 26.2bps.

Euro – Taking advantage of the weaker dollar, the euro gained 0.09% to 1.074 following a signal from ECB president Christine Lagarde last week that the central bank may increase interest rate in July and again in September.

British pound – The pound added 0.25% to 1.263. Chancellor Rishi Sunak has announced the Cost of Living Support package for UK households especially for low-income earners to support consumer spending.

Japanese yen – The yen appreciated marginally by 0.01% to 127.11. Bank of Japan governor Haruhiko Kuroda repeated his view that the central bank must maintain an ultra-easy monetary policy to support the economy. He also said that the central bank can exit the ultra-easy money policy but doing so will not be easy.

Chinese yuan – The yuan appreciated sharply by 0.59% to 6.699. Investors remained concerns on China’s slowing growth despite authorities’ move to ease some lockdown restrictions.

Korean won – The won climbed as well by 0.89% to 1,256.34 following the Bank of Korea rate hike to 1.75% on Thursday. The central bank also said that it will put more focus to fight inflation as now it sees the inflation rate reaching 4.5% this year, compared to 3.1% in the previous forecast.

Australian dollar – The commodity-linked Aussie dollar surged 0.90% to 0.716. According to a report, retail sales in Australia rose by 0.9% m/m April 2022, slower than a 1.6% growth in the prior month but matching market forecasts. This marked the fourth straight month of retail trade growth, as the local economy recover further from Covid-19 adverse effects.

Commodities Highlights

Crude oil – Global oil market saw higher prices when Brent surged 1.73% to US$119 per barrel, while the WTI climbed 0.86% to US$115 per barrel.

Gold – The gold price was up 0.17% to US$1,854/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit strengthened by 0.42% to 4.379 and traded within the range of 4.397 and 4.378. Finance Minister Tengku Zafrul said that the ringgit will strengthen due to strong economic fundamentals and effective ringgit management by Bank Negara Malaysia.

KLSE – The FBM KLCI closed higher by 0.36% to 1,547. Local institutions were net sellers of RM77.5 mil. Local retailers and foreign investors were net buyers of RM6.8 mil and RM70.8 mil respectively.

Fixed Income – The MGS benchmark for the 3-year +1.0bps to 3.495%, 5-year +1.0bps to 3.750%, 7-year +1.0bps to 3.980% and 10-year +1.0bps to 4.140%.

Rates – The IRS yield for (3Y) was 2.2bps higher at 3.507%, (5Y) 2.0bps higher at 3.675%, (7Y) up 4.0bps to 3.840%, and (10Y) up 2.0bps to 4.000%.

Against major currencies – The ringgit slid against the AUD and CNY but rose against the EUR, GBP, JPY, SGD, THB, IDR, PHP and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.3650 and 4.3750 while our resistance is pinned at 4.4000 and 4.4100

Source: AmInvest Research - 30 May 2022