• US Job Market Data to be Published Later Today

Global Highlights

Dollar Index – The dollar gained 0.76% to 105.04, as latest numbers showed that businesses in the US have crated additional 235k jobs in Dec’22, which was higher than Nov’22 numbers of 182k jobs (consensus: 150k). Most jobs created were concentrated in the services-related sectors due to the festive seasons, including leisure & hospitality (+123k) and professional & business services (+52k).

On monetary policy, Fed’s James Bullard (voting member) said in his latest presentation that the Fed’s interest rates are getting closer to the level where it is sufficient to bring down inflation.

The US job market data will be published later today, where a clearer picture on how the Fed will adjust the interest rates will be provided. The market now is still split between 25 and 50bps rate hike in the upcoming meeting on 1st Feb.

US equities & sovereign bonds – Wall Street traded in the red, as the dollar gained. The Dow Jones down 1.02% to 32,930, S&P500 down 1.16% to 3,808 and Nasdaq lost 1.47% to 10,305.

The benchmark UST10Y was up 3.540bps to 3.718% and the UST2Y up 10.420bps to 4.458%, widening the inverted differential between the two to 73.95bps.

Euro – The euro weakened 0.77% to 1.052 due to the stronger dollar. On the macro front, the inflation situation in the Euro Area is showing signs of improvement, as the latest producer price inflation eased down from 30.5% y/y in Oct’22 to 27.1% y/y in Nov’22.

British Pound – The Pound Weakened 1.22% to 1.191 Due to the Stronger Dollar.

Japanese yen – The yen weakened 0.59% to 133.410. On the macro front, Japan’s consumer confidence slightly improved from 28.6 in Nov’22 to 30.3 in Dec’22. However, confidence is still on a downward trend since the beginning of 2022, as the pace of inflation was much faster than the pace of wage growth in the labour market, weighing on consumers’ income.

Chinese yuan – The yuan gained by 0.25% to 6.880, continuing its strengthening against the dollar since the reopening of the economy.

Korean Won – The Won Gained 0.18% to 1,269.58.

Australian Dollar – The Aussie Dollar Weakened 1.27% to 0.675 Due to the Stronger US Dollar.

Commodities Highlights

Crude oil – Oil prices were higher, where Brent went up 1.09% to US$78.69 per barrel and WTI also went up 1.14% at US$73.67 per barrel.

Gold – Gold Weakened 1.17% to US$1,833/oz, Losing Its Momentum After a Week of Gain.

Malaysia Highlights

Malaysian ringgit – The ringgit gained 0.22% to 4.389 and traded within the range of 4.3888 and 4.4063.

The revision of the 2023 Annual Budget is expected to be tabled on 24th Feb, where minor changes are expected. For example, the Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad is expecting that more incentives will be announced fore electric vehicle-related sector.

KLSE – The KLCI closed higher by 0.77% to 1,481. Detailed transaction showed that both local retailers and foreign investors were net buyer with RM5.3mil and RM86.6mil respectively. Meanwhile, local institutions were the net seller with RM91.9mil.

Fixed Income – The MGS 3y lost -1.0bps to 3.586%, 5y up +2.0bps to 3.784%, 7y +2.0bps to 3.970%, and 10y +3.0bps to 4.022%.

Rates – The IRS yield for the 3-year up +2.00bps to 3.635%, 5-year +4.50bps to 3.705%, 7-year +4.00bps to 3.850%, and 10-year +6.00bps to 3.960%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.360 and 4.370 while our resistance is pinned at 4.440 and 4.450

Source: AmInvest Research - 6 Jan 2023