The US

The Dollar started the week on weaker note as it dipped 0.22% to 104.29. Investors took to the side-line as they await for Fed’s Chair Jerome Powell’s testimony which will due on Tuesday and Wednesday and also for February’s non-farm payroll data which will be released on Friday.

US Equities & Sovereign Bonds

Wall Street closed mixed with the Dow Jones rose 0.12% to 33,431, S&P500 climbed 0.07% to 4,048 while Nasdaq lost by 0.11% to 11,676.

The UST10Y benchmark yield added 0.6 bps to 3.958% and the UST2Y gained 3 bps to 4.886%, widening the inverted differential to 92 bps.

Eurozone

As the dollar weakened, the Euro gained 0.43% to 1.068. Retail sales in the Eurozone ticked up less than expected. On month-to-month basis, it grew 0.3% m/m in January 2023 after a 1.7% decline in the previous month and against the market expectation of 1.0% m/m growth. This indicates that that the economy is still facing heightened uncertainties.

The UK

The UK Sterling lost 0.09% to 1.203. On the data front, the S&P Global/CIPS UK Construction PMI rebounded to 54.6 in February 2023 from 48.4 in the prior month (cons.: 49.1) the first growth since November 2022, driven by expansion in civil engineering and commercial building construction. But the elevated interest rates effects can still be seen in the residential housing market as the segment’s contraction continued for the third straight month.

Japan

The Japanese Yen weakened slightly by 0.04% to 135.93 despite the weakened greenback. Lawmakers and political seniors in Japan mostly voiced out the same concerns that the market will be disrupted if the BoJ abruptly pivot towards tightening its policy.

China

Similarly, the Yuan depreciated 0.40% to 6.392. Amid years of sanction by the US in containing the Chinese technology development, China’s central government plans to increase spending on science and technology by around 2.0% in 2023, according to draft budget released by MoF on Sunday. The central government’s total expenditure on research and development in 2022 reached 3 trillion Yuan and taking up 2.5% of national GDP.

South Korea

The Won appreciated 0.35% to 1,297. The inflation rate in South Korea eased to 4.8% y/y in February 2023, down from 5.2% y/y, in the first month of 2023. It marked the slowest growth pace in ten months, and beating market expectation of 5.0% y/y. This will put less pressure on the Bank of Korea (BoK) to remain on hawkish stance.

Australia

The Aussie Dollar fell 0.59% to 0.673 ahead of the RBA’s meeting. The central bank is expected to raise its interest rate by 25 bps to bring it to 3.60% during its meeting today while the market will assess the tone as policymakers struggle to decide when the peak cash rate should be.

Crude Oil

Oil prices edged higher as traders put out concerns on tight supplies and China’s demand. Brent rose 0.41% to US$86 per barrel while WTI climbed 0.98% to US$80 per barrel.

Gold

Gold Fell 0.52% to US$1,847/oz.

Malaysia Highlights

The Ringgit depreciated marginally by 0.02% to 4.478, erasing some gains when it opened at 4.470/4.475.

Ringgit Outlook for the Week

The USD/MYR is expected to range between support level of 4.460 and 4.470 while resistance is pinned at 4.500 and 4.510.

FBM KLCI

The FBM KLCI fell by 0.06% to 1,453. Detailed transactions showed that the local institutions and retailers were the net buyer with RM161.1 million and RM21.9 mil, respectively. Foreign investors were the net seller with RM183.0 million.

Fixed Income

The local fixed income market saw a tepid day ahead of Thursday’s MPC decision. The MGS benchmark yield of 3-year and 7-year was flat at 3.580% and 3.900%, respectively. Meanwhile, 5-year benchmark -2.0 bps to 3.690%, and 10-year -2.0 bps to 4.060%.

Source: AmInvest Research - 7 Mar 2023