• US Inflation Numbers to be Published This Week.

Global Highlights

Dollar Index – The dollar weakened by -1.11% to 103.879, as the market responded that the US’ unemployment rate fell from 3.6% in Nov’22 to 3.5% in Dec’22.

Despite the declining unemployment rate, job creation in the US is on a downward trend since Aug’22. Latest numbers showed that the US economy only added 223k jobs in Dec’22, which is smaller than 256k jobs back in Nov’22.

Focus this week will be the inflation numbers that will be published on Thursday. Consensus are expecting that the inflation rate for Dec’22 will fall to 6.5% y/y (Nov’22: 7.1% y/y).

US equities & sovereign bonds – Wall Street traded in the green, as the dollar weakened and optimism brought by lower-than-expected US wage growth in Nov’22. The Dow Jones up 2.13% to 33,631, S&P500 up 2.28% to 3,895 and Nasdaq up 2.56% to 10,569.

Euro – The euro gained 1.16 to 1.064 due to the weaker dollar. On the macro front, the inflation situation in the Euro Area is showing signs of improvement, as the consumer price inflation receded from 10.1% y/y in Nov’22 to 9.2% in Dec’22, based on flash estimates. Price increase in energy was slower, but price increase for food, non-energy industrial goods and services were much faster than the previous month.

British pound – The pound gained 1.55% to 1.209 due to the weaker dollar. Monthly GDP data for the UK will be published later on Friday, where the economy is expected to slip into contraction.

Japanese Yen – The Yen Gained 1.00% to 132.080.

Chinese yuan – The yuan gained by 0.76% to 6.828, continuing its strengthening against the dollar since the reopening of the economy. Focus will be on China’s trade data for Dec’22, where the impact from the zero-Covid policy will be much clearer.

Korean won – The won gained 0.08% to 1,268.55 due to the weaker dollar. The Bank of Korea (BOK) monetary policy committee will be meeting on Friday, where market is expecting another 25bps rate hike will be made, pushing the interest rates to 3.50%.

Australian Dollar – The Aussie Dollar Gained 1.85% to 0.688 Due to the Weaker US Dollar.

Commodities Highlights

Crude oil – The movement of oil prices was mixed, where Brent went down 0.15% to US$78.57 per barrel, while WTI went up 0.14% at US$73.77 per barrel.

Gold – Gold Gained by 1.79% to US$1,865.69/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit weakened 0.34% to 4.404 and traded within the range of 4.3888 and 4.4043.

The industrial production (IP) will be published later on Wednesday, where consensus is expecting the IP growth to cool down from 4.6% in Oct’22 to 3.6% in Nov’22, reflecting the slowdown from the external front. Moving forward, we expect IP growth to be slower, as the latest PMI numbers showed that the manufacturing activities in Malaysia continue to remain below the contraction threshold since Sept’22. Slower expected IP number is indicative of tapering GDP growth in 2Q22.

KLSE – The KLCI closed lower by 0.03% to 1,481. Detailed transaction showed that both local retailers and foreign investors were net buyer with RM5.0mil and RM40.6mil respectively. Meanwhile, local institutions were the net seller with RM45.6mil.

Fixed Income – The MGS 3y up +1.5bps to 3.600%, 5y +2.0bps to 3.818%, 7y +3.0bps to 4.005%, and 10y +2.0bps to 4.042%.

Rates – The IRS yield for the 3-year up +2.50bps to 3.660%, 5-year +2.50bps to 3.730%, 7-year +1.90bps to 3.869%, and 10-year +3.50bps to 3.995%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.380 and 4.390 while our resistance is pinned at 4.440 and 4.450

Source: AmInvest Research - 9 Jan 2023