The US

The greenback inched higher by 0.09% to 103.65 and traded within range of 103.24 and 103.76 as investors took to the side-line and were cautious ahead of the US Fed meeting and the release of US inflation data.

US equities & sovereign bonds

Wall Street was traded in green as the Dow Jones rose 0.56% to 34,066, S&P500 climbed 0.93% to 4,339, and Nasdaq was up by 0.1.53% to 13,462.

The 2Y and 10Y US Treasuries edged lower by 4.577% and 3.736%, respectively, narrowing the inverted differential between the two slightly to 84 bps.

Euro Area

The Euro gained 0.07% to 1.076. Despite the recent data showing the recessionary setting, the ECB is expected to continue raising its interest rates during this week’s meeting which will bring main refinancing rates to 4.00% and narrowing policy gap with the US Fed.

The UK

The British Pound was bearish and closed lower by 0.50% to 1.251. The hawkish tone by one of the BoE policymakers could not help containing the currency losses. Jonathan Haskel, one of the members of the MPC, detailed that further rise in interest rate “cannot be ruled” out amidst decades high inflation in the country.

Japan

The USD/JPY pair climbed 0.14% to 139.60. The BoJ is more likely to stick with ultra-accommodative interest rates in the short-term including at this week’s policy meeting, according to a former deputy governor Masazumi Wakatabe. He noted that it is still too early to call that this inflation has been sustainable and stable despite the latest reading at 3.5% y/y as it is mainly driven by cost-push.

China

The Yuan depreciated 0.22% to 7.147, the lowest level in more than six months. The PBoC’s governor Yi Gang stated that the central bank will continue deploying targeted policy and ensure stable credit growth. This is despite the rising calls for more stimulus as China’s pandemic recovery remains shaky as indicated by most recent economic data where exports declined by 7.5% y/y and official PMI was in the contractionary region at 48.8.

South Korea

The Won strengthened 0.27% to 1,288. The BoK governor Rhee Chang-yong warned mounting financial sector risks amid a rise in real estate loan delinquencies even as the broader housing market slowly recovers after the central bank had raised its base rate to its highest level since 2008 at 3.50% to fight inflation.

Australia

Notwithstanding the firmer USD, the Aussie dollar rose 0.13% to 0.675 benefitting from the lingering support of RBA’s surprisingly hawkish move last week. Today, both business and consumer confidence data will be released for market players to gauge clearer on current economic standing amidst high inflationary environment and expensive borrowing costs.

Crude oil

With oil demand from China remained muted, market players remained cautious in the oil market. Brent dropped 3.94% to USD71.8 per barrel while WTI dropped 4.35% to USD67.1 per barrel.

Gold

Gold dipped 0.17% to USD1,957/oz as the US dollar and UST yields traded higher.

Malaysia Highlights

The Ringgit weakened 0.13% to 4.620 and had a range of 4.614 and 4.627 throughout the session. According to the Prime Minister, Malaysia will launch a new economic blueprint aimed at restructuring the economy. The economic plan will focus on high value industries, building social safety nets and improving the job market and will be developed over the next few national economic council action meetings.

Ringgit outlook for the week

The support level for USD/MYR is seen at 4.590 and 4.600 while resistance is pinned at 4.620 and 4.650.

FBM KLCI

The FBM KLCI rose 0.78% to 1,387. Detailed transactions showed that foreign investors were the net buyers with RM12.4 million flow, respectively, while being offset by the net selling flow from local institutions and retailers with RM7.1 million and RM5.3 million flow.

Source: AmInvest Research - 13 Jun 2023