• UK Prime Minister Boris Johnson resigns

Global Highlights

Dollar Index – The dollar rose 0.03% to 107.130, reflecting pessimism among financial markets and the Fed’s hawkishness from its latest minutes. St Louis Fed president James Bullard said that the US economy is expected to continue to grow this year despite the Fed’s aggressive tightening to cool inflation.

US equities & sovereign bonds – Wall Street rallied where Dow Jones added 1.12% to 31,385, S&P 500 increased 1.50% to 3,903 and the tech heavyweight Nasdaq jumped 2.28% to 11.621. The UST10Y/UST2Y inverted to -1.96bps, where the UST10Y was at 2.995% and UST2Y to 3.014%.

Euro – The euro weakened 0.22% to 1.016, reflecting further pessimism on the Euro economy amid high inflation, slower growth and the incoming interest rate hike later this month.

British pound – The pound gained by 0.81% to 1.202, as the resignation of Prime Minister Boris Johnson added more economic uncertainties faced by Britain, which is already under pressure from high inflation, the possibility of a recession, and effects from Brexit.

Japanese yen – The yen lost 0.04% to 136.010. The BoJ is likely to raise its inflation and growth forecast while maintaining its ultra-low interest rates at this month’s policy meeting.

Chinese yuan – The yuan climbed 0.11 % to 6.701. China faces potential calling for bankers, especially with slowing offerings in other markets, as companies IPO listing applications nearly doubled to the highest in at least three years.

China’s Ministry of Finance is considering to sell CNY1.5 tn (US$220 bil) of special bonds in the second half of this year, bringing forward the quota from next year. This is an attempt achieve the 5.5% annual growth target, and for the government going to push for higher spending on infrastructure project after the economic slowdown in the first half due to Covid containment measure.

Korean won – The won appreciated by 0.64% to 1,299.91. To keep the debtto-GDP ratio at the mid-50% by 2027, the South Korean government intends to reduce the fiscal deficit to GDP ratio to the pre-pandemic level of 3% or lower from the approximately 5% estimated for this year.

Australian dollar – The Australian dollar strengthened by 0.87% to 0.684. With the recent steady rise in hospital admissions caused by the new Omicron subvariants, Australia is expanding the delivery of the fourth dosage of Covid- 19 vaccines starting next week.

Commodities Highlights

Crude oil – Oil prices gained where Brent was up 3.94% at US$104.65 and WTI rose 4.26% to US102.73 per barrel. The overall downward trend for the past few weeks signalled the market’s pessimism on the global growth outlook.

Gold – The gold price gained 0.07% to US$1,740.16/oz after some bargains from investors following some weakening of the dollar.

Malaysia Highlights

Malaysian ringgit – The ringgit depreciated by 0.08% to 4.428 due to the stronger dollar. The unemployment rate remained unchanged at 3.9% in May, with total people entering the labour force increasing to 16.54mil, indicating the improving of the economy.

KLSE – The FBM KLCI lost 0.15% to 1,419. Detailed transactions showed that local institutions and local retails were net buyers of RM0.6 mil and RM4.4 mil respectively. Foreign investors were net seller of RM5.0 mil.

Fixed Income – The MGS benchmark for the 3-year remained at 3.460%, 5- year up 3.0bps to 3.840%, 7-year up 4.0bps to 4.070%, and 10-year up 6.0bps to 4.155%.

Rates – The IRS yield for (3Y) was down 0.5bps to 3.470%, (5Y) unchanged at 3.650%, (7Y) up 3.0bps to 3.780%, and (10Y) up 3.5bps at 3.885%

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.4300 and 4.4350 while our resistance is pinned at 4.4000 and 4.5000.

Source: AmInvest Research - 8 Jul 2022