• Fed Chair emphasised the US economy is strong enough to handle tighter monetary policy.

Global Highlights

Dollar Index – The dollar gained by 0.22% to 104.431 despite the Fed Chair Jerome Powell cited the ongoing interest rate hike will cool down price pressure and the economy is strong enough to handle tighter monetary policy. We continue to believe the aggressive rate hikes will bring forward a sharper economic slowdown that could lead to recession in 2023.

US equities & sovereign bonds – Wall Street gained where Dow Jones up 0.64% to 30,677, S&P 500 gained 0.95% to 3,796, and Nasdaq jumped 1.62% to 11,232. The differential between MGS10y and UST10y is 112.10bps, USDT10y and UST2y is 7.25bps. Where, the UST0y was at 3.087% and the UST2y was at 3.015%

Euro – The euro weakened 0.41% to 1.052. Economic data S&P Composite PMI in the Euro area fell from 54.8 in May to 51.9 in June, a 16-month low due to high inflation, energy prices and increasing borrowing costs.

British pound – The pound lost by 0.05% to 1.226. The UK composite remained at 53.1, which is still above the expansion level. However, its indicator also signals that the high inflation has affected new orders and businesses are already bracing for further slowdown in months to come.

Japanese yen – The yen gained by 0.96% to 134.950. Former head of foreign exchange policy at the finance ministry said that Japan cannot rule out the possibility of intervening the yen directly in currency markets, to avoid the currency depreciating further amid higher global interest rates.

Chinese yuan – The yuan gained 0.06% to 6.699. Chinese President Xi Jinping reaffirmed the economic target of 5.5% for the year despite government’s zero-Covid policy that is affecting the economy and weaker housing market.

Korean won – The won depreciated 0.28% to 1,301.39. The currency dropped to the lowest level in 13 years amid concerns on aggressive rate hikes in the US and surging prices.

Australian dollar – The Aussie dollar lost by 0.43% to 0.690. Australia’s prime minister welcomes talks with its major trading partner China to improve years of strained relations between two countries.

Commodities Highlights

Crude oil – Oil prices were lower where Brent down 1.51% to US$110.05 per barrel and WTI down 1.81% to US$104.27 per barrel.

Gold – The gold price declined 0.81% to US$1,823/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit weakened 0.01% to 4.406. Malaysia’s leading index (LI) for April 2022 eased from -1.4% in March 2022 to a -0.5 per cent in April 2022, suggesting that the economic recovery is moving in a better direction. The improvement came from real imports and expected sales in the manufacturing sector.

KLSE – The FBM KLCI lost by 0.003% to 1,431. Detailed transactions showed that local institutions net seller of RM41.6 mil. Local retails ad foreign investors were net buyer of RM36.6 mil and RM5.0 mil respectively.

Rates – The IRS yield for (3Y) was -12.0bps to 3.605%, (5Y) -7.5bps to 3.775%, (7Y) -10.5bps to 3.895%, and (10Y) -10.0bps to at 4.000%

Against major currencies – The ringgit was weaker against JPY, CNY, SGD and IDR, and gained against the EUR, GBP, AUD, THB, PHP and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.4000 and 4.4100 while our resistance is pinned at 4.4200 and 4.4300.

Source: AmInvest Research - 24 Jun 2022