• Major monetary policy decisions this week, including Australia and European Union

Global Highlights

Dollar Index – The dollar gained 0.29% to 102.437. The outlook on the dollar is mildly hawkish, as more businesses are expecting the Fed will remain hawkish on the monetary policy, which could slow down the economy even further. In other news, the US Commerce Department launched a plan to attract foreign tourists to the US, which are estimated to generate around US$289bil to the economy.

US equities and sovereign bonds – Wall Street gained, where the Dow Jones rose 0.05% to 32,916, S&P 500 up 0.31% to 4,121, and Nasdaq added 0.40% to 12,061. The yield differential between the UST10 and MGS10 was around 134.59bps Also, the yield differential between the UST10 and UST2 was 31.37bps where the UST10 was at 3.04% and the UST2 at 2.73%.

Euro – The euro was weaker by 0.21% to 1.070. The appetite for the euro is expected to remain firm as the market is awaiting a clearer picture of how and when the European Central Bank will tighten its monetary policy in the upcoming meeting this Thursday.

British pound – The pound was up 0.35% to 1.253. Apart from the uncertain outlook and the economy plus high prices for goods and services that are worsening the cost of living situation, the UK is facing another uncertainty on the political front. The pound is expected to hold around the current level as the prime minister just won a vote of confidence.

Japanese yen – The yen was 0.76% weaker to 131.880. The Bank of Japan’s governor Haruhiko Kuroda has emphasized that tightening will not happen soon despite the depreciation of the yen, and high commodity prices, as the move seen it as unsuitable since the economy is still recovering from the Covid-19 pandemic.

Chinese yuan – The yuan was 0.10% stronger at 6.654. The services PMI contracted for the third month in May, as the latest reading stood at 41.4 due to ramifications from Covid-19-related lockdowns. New orders declined, employment fell, and output costs increased as businesses passed additional costs to customers.

Korean won – The won was 0.91% weaker at 1,253.86. On the macro front, South Korea has the highest household debt-to-GDP ratio at 104.3% in the first quarter of this year, according to a global finance report. This reading is higher than other 36 countries mentioned in the report, including the US, Japan, China and European Union.

Australian dollar – The Aussie dollar slid 0.19% to 0.719. Consensus is expecting that the Reserve Bank of Australia (RBA) will be making another interest rate hike in the its meeting later today. This was due to latest inflation numbers that stood at 5.1% in the first quarter, the highest reading since the pandemic.

Commodities Highlights

Crude oil – Brent was lower by 0.18% at US$119.51 per barrel, while WTI closed lower by 0.31% to US$118.50 per barrel.

Gold – The gold price declined 0.53% to US$1,841.43/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit stood at 4.389, as Monday marked the King's birthday.

KLSE – The FBM KLCI last closed at 1,538, as Monday was a holiday, marking the King's birthday.

Rates – The IRS yield for (3Y) was at 3.610%, (5Y) at 3.795%, (7Y) at 3.930%, and (10Y) at 4.070%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.3900 and 4.4000 while our resistance is pinned at 4.4150 and 4.4250.

Source: AmInvest Research - 7 Jun 2022