The US

The DXY Dollar gained by 0.34% to 102.276 by end of the trading day. Focus this week will be on the Federal Open Market Committee’s (FOMC) decision, where market is expecting a 25 bps rate hike. The situation on the US debt ceiling is also the focus among investors though historical guidance suggests that the issue is likely to be resolved.

US Equities & Sovereign Bonds

Wall Street closed lower on Monday prior to the FOMC’s decisions and corporate earnings results. Dow Jones down by 0.77% to 33,717, S&P500 down by 1.30% to 4,018, and Nasdaq also down by 1.96% to 11,394.

The UST10Y benchmark yield up 3.310 bps to 3.537% and UST2Y up 3.510 bps to 4.234%. The 10/2 spread remained inverted, widening to 69.75 bps.

Eurozone

The Euro lost by 0.16% to 1.085. Despite the weakening currency, sentiment in Europe as implied by the European Commission’s Economic Sentiment Indicator improved to a seven-month high in January, increasing by 2.8 points to 99.9. There was an improvement in sentiment across the sectors, except for the construction sector. Furthermore, inflation expectation also dropped two a twoyear low.

The UK

The Sterling weakened by 0.24% to 1.235. The mortgage approvals data for December 2022 is due to be published later today, where a downward trend is expected to continue. Previously, the data showed that total mortgage approvals dropped from 57.9k units in October 2022 to 46.1k units in November 2022 as the economy struggles with deepening recessionary risk.

Japan

The Yen weakened by 0.39% to 130.390. Members of academics and businesses have urged the Bank of Japan (BoJ) to maintain its 2.0% inflation target as a long-term goal, in order to maintain price stability. This proposal is to ensure continuity, as the new BoJ Governor is expected to be named soon.

China

The Yuan gained by 0.59% to 6.523. Latest data by Bloomberg showed that spending during the Lunar New Year did improve after the removal of the zeroCovid policy.

South Korea

The Won gained 0.33% to 1,227.39. The South Korean president has approved subsidies for heating for the low-income households to cope the higher energy bills.

Australia

The Aussie Dollar weakened 0.56% to 0.706. The retail sales data will be published later today, where it could provide some idea of where private spending will be heading. Recently, survey showed that Australia’s households have planned to cut down spending to cope with the high prices.

Crude Oil

Prices for oil continued to trade lower prior the decisions from major central banks this week, including the Federal Reserve, The Bank of England, and European Central Bank. Brent down 2.03% to USD84.90 per barrel and WTI also down by 2.23% to USD77.90 per barrel.

Gold

Gold lost 0.25% to US$1,923/oz, losing its momentum prior the decisions from the major central banks this week.

Malaysia Highlights

The ringgit strengthened further by 0.02% to close at 4.244, sustaining the momentum since the beginning of the year. On the macro front, the producer price index (PPI) increased from 3.2% y/y in November 2022 to 3.5% y/y in December 2022. All major sectors recorded a price increase, where the manufacturing sector recorded the highest increase of 6.1% y/y. Prices in the agriculture sector however declined by 17.5% y/y. However, on a month-onmonth basis, the PPI declined by 0.3%.

Against Other Currencies

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.220 and 4.230 while our resistance is pinned at 4.260 and 4.270.

FBM KLCI

The FBM KLCI up 0.12% to 1,499. Detailed transaction showed that local institutions and local retailers were net buyer of RM9.6 million and RM39.0 million respectively. Foreign investors were net seller of RM48.6 million.

Fixed Income

The benchmark yield MGS 3Y up +0.3bps to 3.390%, 5Y +1.2bps to 3.555%, 7Y +1.0nps to 3.665%, and 10Y +0.8bps to 3.780%.

Source: AmInvest Research - 31 Jan 2023