• Bank of England hints at higher interest rates

Global Highlights

Dollar Index – The dollar weakened 0.64% to 107.366 but is expected to gain in the upcoming days prior to the FOMC meeting on 26–27 July.

US equities & sovereign bonds – Wall Street was down where Dow Jones slid 0.69% to 31,073, S&P 500 lost 0.84% to 3,831 and the tech heavyweight Nasdaq shed 0.81% to 11,360. The UST10Y benchmark yield continued to climb to 2.986%, while the UST2Y was at 3.174%, where the differential between these securities were -18.89bps.

Euro – The euro was 0.62% higher at 1.014 due to the weaker dollar. EU foreign ministers are set to approve an additional €500 million in EU funding to provide Ukraine with arms, bringing the total amount of security support given to €2 billion.

British pound – The pound added 0.83% to 1.195. The Bank of England said that the interest rate in the UK is likely to rise above 2.0% to tackle inflationary pressure despite the slowing economy. Currently, the UK’s inflation rate is at 9.1%, and the interest rate is at 1.25%.

Japanese yen – The yen gained 0.31% to 138.140 amid the weaker dollar.

Chinese yuan – The yuan edged up 0.21% to 6.743. China's retail sales of consumer goods rose 3.1% y/y in June, largely attributed to stimulus measures targeted at boosting automobile sales, home appliances and other big-ticket items.

Korean won – The won appreciated 0.67% to 1,317.18. The central bank will closely monitor the impact of higher interest rates on the stability of the financial system and would assist in policy efforts on easing debt burdens for those facing difficulties. The finance minister has reassured that capital outflows should not be a cause for concern.

Australian dollar – The Aussie dollar climbed 0.28% to 0.681. The treasurer warned of “confronting” the grim news regarding the state of the nation’s finances as taxpayers are expected to face a A$13bil rise in government debt due to soaring interest rates.

Commodities Highlights

Crude oil – Oil prices gained where Brent edged up 5.05% to US$106.27 per barrel and WTI rose 5.13% to US$102.60 per barrel. Oil prices experienced gains due to concerns over the gas supply from Russia and a lower dollar, offsetting demand fears caused by a possible recession and China lockdowns.

Gold – The gold price gained 0.06% to US$1,709/oz, but still lower relative to the past five weeks’ trend due to investors’ continued flight to the dollar safe haven.

Malaysia Highlights

Malaysian ringgit – The ringgit was on the downside as it lost 0.09% to 4.454 despite weaker dollar and stronger yuan. The Tourism, Arts and Culture Ministry has revised the target for tourist arrivals of 4.5 million. This was after successfully attracting around 2 million tourists since the reopening of international borders on 1 April.

KLSE – The FBM KLCI was up by 0.78% to 1,430. Detailed transactions showed that local institutions and local retailers were net sellers of RM60.2 mil and RM21.5 mil respectively. Foreign investors were net buyers of RM81.7 mil.

Rates – The IRS yield for the (3Y) was -2.0bps to 3.400%, (5Y) -1.0bps to 3.535%, (7Y) -1.5bps to 3.625%, and (10Y) -3.0bps to at 3.730%

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.450 and 4.470 while our resistance is pinned at 4.560 and 4.610.

Source: AmInvest Research - 19 Jul 2022