The US

The dollar index it rose marginally by 0.01% to 104.60 to stay elevated. The second reading for 4Q2022 core personal consumption expenditure (PCE) was revised upwards to 4.3% q/q, up from 3.9% in the previous estimate. Also, the initial jobless claims unexpectedly fell to 192k last week, down from 195k from the previous week (cons.: 200k), indicating that the labour market is still tight.

On another note, New York Fed President John Williams stated that the Fed is “absolutely” committed in bringing inflation down.

US Equities & Sovereign Bonds

Wall Street closed higher as the Dow Jones rose 0.33% to 33,154, S&P500 climbed 0.53% to 4,102 while Nasdaq gained 0.72% to 11,590.

The UST10Y benchmark yield fell 4 bps to 3.877% while the UST2Y added 0.4 bps to 4.697%, widening the inverted differential to 82 bps.

Eurozone

The Euro fell 0.08% to 1.060 as the dollar strengthened. The inflation rate in the Euro Area was revised slightly higher to 8.6% y/y in January 2023, from 8.5% in the initial estimates. It marked the lowest level since May 2022 thanks to the easing energy prices but still way above the ECB’s target of 2.0%. Also, the core CPI was also revised to reach a new record high of 5.3% from 5.2%.

The UK

The British pound lost 0.27% to 1.201. One of the BoE officials Catherine L. Mann noted that more tightening is needed, and any pivot is not guaranteed as the policy is now seen not restrictive enough to prevent the risks of worsening inflation situation.

Japan

The Yen appreciated 0.10% to 134.70. According to the current Governor Haruhiko Kuroda, the BoJ aims to maintain its accommodative monetary policy, in parallel with the deployment of government’s energy assistance programme which is expected to weigh on inflation. This is ahead of the new Governor nominee Kazuo Ueda scheduled to speak in parliament today. (24th Feb).

China

The Yuan weakened 0.22% to 6.908. China’s Premier XI Jinping is anticipated to instil key associates to run the helm of PBoC, in an effort to recover his party’s influence over the country’s financial affairs. It is considered as a continuation of the President’s effort in shaping the economy. However, the decision is not yet final as formal appointment will only be made in early March.

South Korea

The Won appreciated 0.63% to 1,297. The Bank of Korea, during its policy meeting, held its key interest rate unchanged at 3.50%, the first pause after almost a year of rate hike, in line with market expectations. The Governor Rhee Changyong told that it is time “stop and watch” until volatility subsides and will not resume unless if inflation rebounded upwards.

Australia

The Aussie Dollar gained marginally by 0.06% to 0.681. An analysis from the Australia Institute showed that the current soaring inflation is being driven by company profits. Amidst supply chain disruptions and upswing in energy prices, companies profit posted profits more than those increases.

Crude Oil

Oil prices was supported by the expectations Russia’s plan to cut oil production next month. Brent gained 2.00% to US$82 per barrel while WTI rose 2.02% to US$75 per barrel.

Gold

Gold prices fell 0.17% to US$1,822/oz as US Fed Funds Rate is expected to be higher for longer period.

Malaysia Highlights

The ringgit strengthened 0.23% to 4.434. All eyes are on the re-tabling of Budget 2023 later today (24th Feb). Considering that this budget comes at times when the global economy is entering soft patch period, the re-tabling today would be closely monitored particularly in the context of striking the balance between boosting investors’ confidence, sustaining economic growth and the forward-looking path of fiscal situation.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.400 and 4.410 while our resistance is pinned at 4.450 and 4.460.

FBM KLCI

The FBM KLCI fell 0.43% to 1,458. Detailed transactions showed that the foreign investors and local retailers were the net buyers with RM41.0 million and RM31.80 million flow, respectively, offset by the local institutions at RM72.80 million

Source: AmInvest Research - 24 Feb 2023