• Fed Governor backs a half percentage points in following meetings to curb inflation.

Global Highlights

Dollar Index – The dollar was unchanged at 101.668 as most US market was closed due to Memorial Day. Fed Governor Christopher Waller, a voting FOMC member said that the Fed should be prepared to increase the interest rates by a half percentage point at every following meeting to curb inflation.

US equities and sovereign bonds – Wall Street unchanged, as the market was closed due to Memorial Day. The yield differential between the UST10 and MGS10 was around 140.72bps Also, the yield differential between the UST10 and UST2 was 26.20bps where the UST10 was at 2.74% and the UST2 at 2.48%.

Euro – The euro gained 0.41% to 1.078. Latest confidence indicator by the European Commission showed that the reading rose from 104.9 revised to 105.0. The slight improvement was due to better readings in services and construction sectors, as Covid-related restrictions were removed. But concerns regarding prices persist.

British pound – The pound up 0.25% to 1.263. As property boom is waning down, more homeowners in the UK are offering discount and rebates to attract potential buyers. Appetite from property in the UK is slower as most people are holding back their purchases due to rising cost of living.

Japanese yen – The yen was 0.38% weaker to 127.590. Despite the recent weakening of Yen and inflation breaching above the 2 percent target, the Bank of Japan governor Haruhiko Kuroda has said that the central bank will continue its current stance to support the economy from the slowdown caused by Covid-19.

Chinese yuan – The yuan gained 0.57% to 6.661. Covid-19 cases in major cities in China, including Shanghai has receded in the past few days. The authorities now have removed some of the restrictions, including allowing workers to return to work. Economic support was also provided to address the ramification of the restrictions that was implemented earlier.

Korean won – The won up 1.40% to 1,238.800. South Korea has passed a KRW62 trillion supplementary budget to support small business and households as the economy is recovering from Covid-19 outbreak earlier.

Australian dollar – The Aussie dollar up 0.47% to 0.720. Apart from addressing the cost of living issue, the newly elected Australian Prime Minister Anthony Albanese will be working with several major economies including the US, Japan, and India to address China’s growing influence in the region.

Commodities Highlights

Crude oil – Brent was higher by 1.88% at US$121.67 per barrel, and WTI closed higher by 0.86% to US$115.07 per barrel.

Gold – The gold price increased 0.17% to US$1,853.72/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit gained by 0.28% to 4.366.

KLSE – The FBM KLCI closed lower by 0.24% to 1,543. Local institutions and local retailers were net sellers of RM4103.0 mil and RM19.1 mil respectively. Foreign investors were net buyers of RM122.1 mil.

Fixed Income – The MGS benchmark for the 3-year down by 3.5bps to 3.460%, 5-year down 4.5bps to 3.705%, 7-year down 3.0bps to 3.950%, and 10-year up 2.0bps to 4.160%.

Rates – The IRS yield for (3Y) was 0.8bps higher at 3.515%, (5Y) 1.0bps higher at 3.685%, (7Y) higher 1.0bps to 3.850%, and (10Y) higher 3.0bps to 4.030%.

Against major currencies – The ringgit slid against EUR, AUD, CNY, and SGD, while gained against the GBP, JPY, 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 - 31 May 2022