The US

The dollar index fell slightly by 0.06% to 103.86. The producer inflation for final demand in the US slowed to 6.0% in January 2023 from 6.5% in December 2022 but beating market forecasts of 5.4%. On monthly changes, it increased 0.7% m/m in January 2023, the most in seven months (cons.: 0.4%)

Cleveland Fed President Loretta Mester stated that the Fed could become aggressive in fighting inflation given any upside surprises, and she would have “favoured” for a 50 bps rate hike instead during the meeting earlier this month.

US Equities & Sovereign Bonds

Wall Street sold-off as the Dow Jones fell 1.26% to 33,697, S&P500 edged lower by 1.38% to 4,090 while Nasdaq dipped 1.78% to 11,856.

The UST10Y benchmark yield added 5.6bps to 3.861% while the UST2Y added 1 bps to 4.640%, narrowing the inverted differential to 78 bps.

Eurozone

The Euro fell 0.14% to 1.067. The ECB Chief Economist Philip Lane said in a speech that the central bank’s tightening effect is estimated to have “already lowered inflation by around 0.2 percentage points in 2022”. But due to the lagging nature of monetary policy, we may see further impact in 2023 and beyond. The central is projecting inflation to be lower by 1.2% in 2023 and 1.8% in 2024.

The UK

The British pound shed 0.31% to 1.199. The recent slower inflation in the UK could bode well for the inflation fighting objective by the BoE. However, concerns on US Fed interest rate hike pathway partly pressured the currency.

Japan

The Yen appreciated 0.16% to 133.94. On the data front, Japan's trade deficit widened to a record high of JPY3.5 trillion in January 2023 from JPY1.45 trillion in the previous month (cons.: -JPY3.87 trillion). This marked 18th straight month of trade deficit driven by imports of high commodity prices and weakness in Yen.

China

The Yuan depreciated marginally by 0.04% to 6.858. Chinese new house prices fell 1.5% y/y in January 2023 for a ninth consecutive month and unchanged from December 2022, as home buyers struggled with economic disruptions and rising COVID-19 cases.

South Korea

The Won depreciated 0.18% to 1,285. The unemployment rate in South Korea dropped to 2.9% in January 2023 from 3.1% in December. The economy added jobs for the 23rd straight month, but growth continued to slow as the effects of high interest rate manifests.

Australia

The Aussie Dollar fell 0.35% to 0.688. The labour market is starting to ease as the unemployment rate unexpectedly increased to 3.7% in January 2023 from December's 3.5%. This was the highest jobless rate since May 2022.

Crude Oil

Due to the PPI data mixed with prospect of Chinese demand and a build-up in US stockpiles, oil prices ended lower. Brent fell 0.28% to US$85 per barrel while WTI shed 0.13% to US$78 per barrel.

Gold

Gold Price Firmed 0.40% to US$1,842/oz.

Malaysia Highlights

The ringgit weakened 0.27% to 4.404. Malaysia’s labour productivity in term of value added per employee rose 3.6% y/y in the 4Q2022 compared with 3Q2022 growth of 10.2%, as the economy continued its expansion. All sectors saw increases with the highest growth posted by the construction sector at 10%, followed by mining and quarrying at 6.5%.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.370 and 4.380 while our resistance is pinned at 4.420 and 4.430.

FBM KLCI

The FBM KLCI fell 0.26% to 1,484. Detailed transactions showed that the foreign investors were the net buyers with RM74.4 million flow, offset by the local institutions and retailers at RM40.9 million and RM33.5 million, respectively.

Source: AmInvest Research - 17 Feb 2023