• US market close down due to holiday while the Euro and Pound outperform

Global Highlights

Dollar Index – The greenback was unchanged at 104.70 amid Juneteenth holiday and a Fed official cited the willingness to support another 75bps rate hike in July’s meeting if data allows.

US equities & sovereign bonds – Wall Street was closed on Monday due to Juneteenth holiday. The UST10Y was unchanged at 3.226% while the UST2Y was at 3.179%

Euro – Amidst weaker dollar, the euro rose 0.11% to 1.051. ECB’s President reiterated plan to increase its interest hike twice this summer – July and September as concerns over widening yield spread between euro countries remains. On the data front, construction output in the Euro Area expanded 3% y/y in April 2022, from 3.4% level in the previous month and the lowest rate since December 2021. Also, the French PM lost an absolute majority in parliamentary election despite securing the most seats in the National Assembly.

British pound – The British pound climbed 0.10% to 1.225. The BoE MPC member Catherine Mann cited income data showed persistent inflation is already biting into real income and domestic economy. This paves way for further pressure on the central bank to raise its interest rate for the next couple of meeting.

Japanese yen – The yen weakened further by 0.04% to 135.07, testing the 135- resistance level as the BoJ maintained its stubbornly dovish policy amidst rising global interest rate. Data showed food manufacturers in Japan are being pressured to push their selling price higher resulting from the surging raw materials and crude oil prices. The average selling price of cooking oil surged in May by around 50% higher as supermarket operators unable to absorb the surging prices.

Chinese yuan – The yuan strengthened slightly by 0.36% to 6.693 following PBoC’s decision to keep its benchmark one-year loan prime rate (LPR) unchanged at 3.70% and fiver-year rate at 4.45%, as widely expected. Flat fiver-year rate means that home buyers will not face higher mortgage instalments, which in turn, could encourage more buyers into the property market.

Korean won – The won lost its ground as it depreciated 0.31% to 1,292. On another note, the South Korean government decided to further expand the scale of auto fuel tax cuts to 37% effective from July until end of 2022. The decision was part of efforts to ease inflationary pressure due to surging energy costs.

Australian dollar – The Aussie dollar gained 0.27% to 0.695. On monetary policy front, RBA Governor Philip Lowe is scheduled to give a speech early today alongside with the minutes of June’s policy meeting. This is following a rare television interview he attended last week, stated that the central bank will do what is “necessary” to bring down the inflation.

Commodities Highlights

Crude oil – Supply concerns overwhelmed slowing global economic growth as oil prices was traded higher amidst whipsawed trading session. Brent rose 0.89% to US$114 per barrel while WTI was flat at US$109 per barrel.

Gold – The gold price contracted slightly by 0.04% to US$1,839/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit was relatively unchanged as it edged lower 0.05% to 4.400 and traded within the narrow range of 4.4043 and 4.400. The sales and service tax (SST) exemption for new vehicle order will not be extended beyond 30th June, as announced by the Malaysia Finance Minister, but those who have already ordered their vehicle by 30th June will be permitted until March next year to register their vehicle.

KLSE – The local bourse’s FBM KLCI tumbled 1.06% to 1,441, dragged by energy, construction, and technology. Detailed transactions showed that the local retailers were the net buyers with RM24.5mil flow, offset by the local institutions and foreign investors with selling flow of RM7.3mil and RM17.2mil.

Rates – The IRS yield for (3Y) -2.0bps to 3.770%, (5Y) -4.0bps to 3.9500%, (7Y) -4.0bps to 4.090%, and (10Y) -4.0bps to 4.210%.

Against major currencies – The ringgit had the upper hand against JPY, THB, IDR, PHP, SGD, GBP, AUD, but lost against EUR, CNY, and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.3850 and 4.3900 while our resistance is pinned at 4.4100 and 4.4200.

Source: AmInvest Research - 21 Jun 2022