The US

Following the Martin Luther Day holiday, the dollar index clocked a gain of 0.18% to 102.39 as traders shifted focus towards the BoJ meeting.

US equities & sovereign bonds

Wall Street was mixed with Dow Jones fell 1.14% to 33,911, and S&P500 shed 0.20% to 3,991. Nasdaq, meanwhile, gained 0.14% to 11,095.

The UST10Y benchmark yield added 4.4bps to 3.548% while UST2Y lost 2.7bps to 4.205%, narrowing the inverted differential between the two to 65.7bps.

Eurozone

The euro dipped 0.31% to 1.079. On the data front, some good news prevailed as economic sentiment in Eurozone rebounded to positive territory of 16.7 in January 2023, its highest level since February 2022 as economic outlook improves considerably due to easing energy prices.

The UK

The British pound gained % to 1.219 as the expectation for lower BoE’s policy rate is rising due to tight labour market. This is due to the higher wage growth of 6.4% y/y compared to 6.2% estimate. Additionally, employed persons rose 27k, well above market forecast of 5k persons. Nonetheless, we reiterate our view that the BoE will raise its interest rate by another 50 bps in 1H2023.

Japan

The yen strengthened 0.75% to 1.229 ahead of BoJ meeting today. We maintain our view where the central bank will not change its interest rate level, but we may see some tinge of hawkishness through alterations on some of its policy particularly the yield curve control (YCC).

China

The yuan lost 0.50% to 6.772, its weakest level in a week despite upside surprise in China’s economic data. For the whole year 2022, the Chinese economy grew 3.0% y/y, falling short from official’s target of 5.5% due to the stringent Zero-Covid policy. It was boosted by 2.9% y/y growth in 4Q2022 compared to market estimate of 1.8%.

South Korea

The won weakened 0.25% to 1,239. The South Korean economy is expected to face challenges this year due to high inflation, sluggish domestic consumption and stumbling exports, according to its finance minister during monthly economic assessment.

Australia

The commodity-linked Aussie dollar climbed 0.47% to 0.699. Report showed that consumer sentiment in Australia rose to 84.3 for January 2023, marking back-toback increase and biggest monthly gains since April 2021, showing some improvement on the demand side.

Crude oil

Optimism surrounding China’s reopening continues, sustaining the momentum in crude oil prices. Brent rose 1.73% to US$85 per barrel while WTI climbed 0.40% to US$80 per barrel.

Gold

The precious metal posted 0.38% losses to US$1,909/oz, marking the second consecutive days of falling after reaching more than 1-year high recently.

Malaysia Highlights

The ringgit weakened 0.21% to 4.327, snapping its seven straight days of gains. In light of rising sovereign debt levels, PM Anwar has announced plans to revise Malaysia's budget for 2023. This is due to the fact that budget deficit in 2022 was roughly 5.8% of GDP while total debt was about RM1.5 trillion. Such a level of debt quoted may include contingent liability as well. Besides, he also stated that the government will prioritize increasing the nation's participation in technology and green economy as well as focusing on boosting small and medium enterprises while sustaining fiscal restraint.

Against other currencies

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

Ringgit outlook for the day

We expect the MYR to trade between our support level of 4.290 and 4.300 while our resistance is pinned at 4.370 and 4.380.

KLSE

The local bourse’s FBMKLCI closed lower by 0.10% to 1,494. Detailed transaction showed that foreign investors were the net buyers with RM85.4mil, offset by local institutions and retailers net selling outflow of RM64.3mil and RM21.1mil, respectively.

Fixed Income

The benchmark yield MGS 3Y -3.0bps to 3.520%, 5Y -3.0bps to 3.780%, 7Y - 3.0bps to 3.970%, and 10Y +1.5bps to 3.990%.

Rates

The IRS yield for the 3-year -2.5bps to 3.615%, 5-year -2.0bps to 3.685%, 7-year -1.0bps to 3.825%, and 10-year -1.5bps to 3.950%.

Source: AmInvest Research - 18 Jan 2023