• Malaysia economy grows by 8.9% in 2Q.

Global Highlights

Dollar Index – The dollar rose 0.51% to 105.631 after declining in the previous day. Import prices in the US decreased by 1.4% in July from the previous month, reversing the upwardly revised 0.3% rise previously and above market forecasts of a 1% decline. This represented the first dip in import prices since December 2021 and it may indicate that inflationary pressures have peaked.

US equities & sovereign bonds – Wall Street rallied, where Dow Jones gained 1.27% to 33,761, S&P 500 up 1.73% to 4,280 and the tech heavyweight Nasdaq added 2.09% to 13,047. The UST10Y benchmark yield was at 2.831%, while the UST2Y was at 3.242%, bringing the differential between them to -41.10bps.

Euro – The euro lost 0.59% to 1.026 after gaining the previous trading day. Industrial production in the Euro Area climbed 0.7% m/m in June, up from an upwardly revised 2.1% gain in May and exceeding the 0.2% market consensus.

British pound – The pound dipped 0.55%, closing at 1.214 due to weaker GDP numbers. The pound was trading around 1.220 before dropping to 1.210 after the announcement. GDP shrank by 0.1% q/q in the three months that ended in June, the country's first decline in more than a year and less than market expectations of a 0.2% decline.

Japanese yen – The yen depreciated 0.30% to 133.420 due to the stronger dollar. According to economists, the country's core CPI increased 2.4% in July y/y, the fastest increase since December 2014. The BoJ’s next interest rate review is set for 21–21 September.

Chinese yuan – The yuan gained 0.03% to 6.743 as expectations that the PBoC will maintain its monetary policy amid calls for further easing as China continues to deal with recurrent Covid-19 outbreaks, dangers in the real estate sector, and calming tensions with the US over Taiwan

Korean won – The won firmed 0.06% to 1,302.38. The South Korean government has announced that it will cut spending for 2023 from this year’s 679 trillion won (USD$521 billion), due to rising interest rates in the global environment.

Australian dollar – The Aussie dollar rose by 0.21% to 0.712. According to data from the Housing Industry Association (HIA), Australia's new home sales fell 13.1% m/m in July, after rising by 1.9% in June. Builders reported fewer inquiries and visits to display sites as a result of the recent rises in the cash rate.

Commodities Highlights

Crude oil – Brent fell 1.46% or to US$98.15 per barrel, and WTI shed 2.38% to US$92.09 per barrel as expectations that supply disruptions in the US Gulf of Mexico would be temporary despite fears of recession.

Gold – Gold gained 0.71% to US$1,802/oz, highest level since early July, supported by a strong decline in the dollar when the US inflation figures for July were released that were weaker than anticipated.

Malaysia Highlights

Malaysian ringgit – The ringgit inched up 0.02% to 4.445 due to the stronger GDP growth reported. The ringgit rallied to 4.436 after the announcement, before closing at 4.445. 2Q22 GDP grew by a strong 8.9% y/y from 5.0% in 1Q2022. The domestic demand boom that occurred when the economy recovered from Covid restraints contributed significantly to the greatest GDP growth since 2Q2021. Key drivers for growth were stronger private consumption and robust export performance during the quarter.

KLSE – The FBM KLCI was up 0.04% to 1,506. Detailed transactions showed that local institutions were net seller of RM254.4 mil. Local retailers and foreign investors were buyers of RM48.2 mil and RM206.3 mil respectively.

Fixed income – The MGS for 3-year was up +1.0bps to 3.490%, 5-year up 2.5bps to 3.780%, 7-year up 2.0bps to 3.940%, and 10-year up 3.0bps 3.990%.

Rates – The IRS yield for the (3Y) up 4.00bps to 3.480%, (5Y) +4.25bps to 3.608%, (7Y) up +1.95 3.700%, and (10Y) +1.75bps to 3.798%

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.440 and 4.450 while our resistance is pinned at 4.500 and 4.510.

Source: AmInvest Research - 15 Aug 2022