The US

The Dollar index fell 0.66% to 101.53 following US inflation rate data landed lower than market expectations. During March 2023, the US consumer price grew slower at 5.0% y/y compared to 6.0% y/y in the prior month and 5.2% y/y market consensus. Digging deeper, food prices grew slower while energy costs and prices for used cars and trucks both recorded declines. However, shelter inflation grew higher, which also reflected in higher core inflation rate at 5.6% y/y, up from 5.5% in February 2023.

Not long after the data inflation was released, Fed minutes for the latest meeting showed that several policymakers mulled to pause the rate hike cycle following the most recent banking uproar. However, ultimately policymakers agreed to continue with rate hike moving forward as inflation remained “way above” 2.0% target level.

US Equities & Sovereign Bonds

Wall Street closed in the red as the Dow Jones fell 0.11% to 33,647, S&P500 fell 0.41% to 4,092, and Nasdaq shed 0.85% to 11,929.

The UST10Y benchmark yield lost 4 bps to 3.391% and the UST2Y lost 6 bps to 3.958%%, narrowing the inverted differential to 56 bps.

Eurozone

The Euro rose 0.73% to 1.099. Still hawkish ECB tone and high inflation threat may have supported gains in EUR/USD pair. One of the ECB officials noted that the central bank has to keep fighting inflation in order to keep the risk of “entrenched” inflation in the economy from materializing.

The UK

The British Pound gained 0.49% to 1.249, nearing the ten-months high. The BoE governor Andrew Bailey said that prudent practices put in place after the 2008 financial crisis “have worked” and banks in the UK are basically covered from the recent contagion effects of recent banking crisis. Thus, they are still focusing in fighting inflation moving forward.

Japan

The Japanese Yen appreciated 0.41% to 133.13. On year-to-year basis, machinery orders expanded 9.8% in February 2023, higher than 4.5% in January and 2.9% market expectations. The data can be considered as a proxy of capital spending among businesses amidst further recovery from the pandemic.

China

The Yuan appreciated 0.19% to 6.873. IMF projected that China’s economic growth will reach 5.2% in 2023 and 4.5% in 2024 and will be the “key contributor” for global growth. Following the lift of pandemic rules, as mobility normalized, retail sales and travel bookings will generate positive effects to domestic and also other countries as well.

South Korea

The Won depreciated 0.27% to 1,325. Unemployment rate in South Korea inched higher to 2.7% from 2.6% in February 2023 as labour market continues to show the impacts of elevated interest rate.

Australia

The Aussie dollar rose 0.56% to 0.669. The seasonally adjusted estimate for total dwellings approved in Australia rose by 4.0 percent month-over-month to 12,661 units in February 2023, in line with the flash reading and swinging from a downwardly revised 27.1 percent slump a month earlier.

Crude Oil

Lower than expected US inflation data has propelled oil prices higher as hopes for peaking Fed Funds Rate are getting stronger. Brent rose 1.96% to US$87 per barrel while WTI climbed 2.12% to US$83 per barrel.

Gold

Gold climbed 0.56% to US$2,014/oz as Fed’s persistent focus on inflation fighting narrative could tip the economy into a recession.

Malaysia Highlights

The Ringgit appreciated 0.21% to 4.409 and traded within the range 4.409 and 4.418. The Ministry of International Trade and Industry has changed its name to Ministry of Investment, Trade, and Industry (MITI) to include finding investment opportunities work scope into the portfolio, which in turn, will be one of the key growth drivers for Malaysia’s economy.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.380 and 4.390 while resistance is pinned at 4.420 and 4.430.

FBM KLCI

The FBM KLCI fell 0.08% to 1,435. Detailed transactions showed that local institutions and retailers were the net buyers with RM16.9 million and RM6.8 million, respectively, while being offset by the net selling flow from foreign investors with RM23.7 million.

Source: AmInvest Research - 13 Apr 2023