Snapshot Summary

Global FX: USD struggled to sustain gains amid mixed data while GBP fell as the BOE cut its policy rate.

Global Rates: UST trading was cautious before today's US jobs data release.

MYR Bonds: There was some support for MYR bonds as players reacted to the recent UST strength.

USD/MYR: Amidst weaker regional currencies, ringgit pared gains made earlier during the week.

Macro News

UK: The BOE lowered its benchmark Bank Rate by 25 bps to 4.50% in its February meeting, marking the third rate cut since the start of its cutting cycle in August of last year, as anticipated. The central bank reiterated that monetary easing will be gradual this year, due to growth concerns against persistent levels of underlying services inflation. Furthermore, the BOE downgraded its growth forecasts for the current year, as economic activity had fallen short of November's expectations, signalling a dovish shift in balancing growth and rising prices in the near term.

Germany: Factory orders surged by 6.9% m/m in December, rebounding from a downward revised -5.2% m/m in November and significantly surpassing expectations of a 2.0% increase. This marked the first growth in three months and the strongest pace since September, driven by a 55.5% m/m surge in large-scale orders for aircraft, ships, and trains, along with an 8.6% m/m rise in machinery and equipment orders.

Fixed Income

Global Bonds: UST yields rose slightly with traders conducting some modest net selling activity after recent gains and amid a cautious mood before today's NFP data release. Paring the weakness was initial jobless claims rising to 219k in the week ended 1 February, from an upward revised 208k the week before.

MYR Government Bonds: In the ringgit government bond market, we noted some support coming in due to players reacting to the recent strength in the UST market. We suspect flows were led by foreign interest. Benchmark yields were about 0.5-1 bps lower.

MYR Corporate Bonds: In the ringgit corporate bond market, sentiment improved yesterday with interest seen on some AAA and AA1 names. Amongst these, AAA rated TNB Power Gen 03/33 shed 5 bps to 3.92% and AAA rated BSN IMTN 02/26 fell 3 bps to close at 3.61%.

Forex

US: The dollar struggled to sustain gains amid mixed economic data, inching up by a modest 0.1%. Nevertheless, it was aided by higher treasury yields and comments from Chicago Fed President Goolsbee, who suggested that fiscal policy uncertainty might lead to fewer Fed rate cuts. Traders remain cautious, as they await the release of NFP data.

Europe: Cable fell after the BOE rate cut drove it to a session low of 1.2361, especially after two policymakers pushed for an even bigger reduction, but it managed to recover slightly, ending around 1.244. Traders are now pricing in roughly 67 bps of additional BoE easing by year-end.

Asia Pacific: The yen spiked after BoJ's Tamura suggested rates might need to climb toward 1.00% by the latter half of 2025, but it trimmed gains once he clarified he wasn't pegging a new neutral rate. The Japanese yen was last hovering around 151.41 on the day, as weaker US wage data took some shine off dollar strength. On a broader front, China's new WTO complaint against fresh US tariffs reignited trade-war worries. The yuan subsequently slipped to 7.285 despite a stronger PBOC midpoint at 7.1691.

Malaysia: Amidst weaker regional currencies, ringgit fell to 4.436, paring some gains made earlier during the week. Last night's weaker-to-mixed US data could open a firmer path for the ringgit but any further escalation of trade tensions could wipe that prospects away.

Other Markets

Gold: Gold fell off from the recent record highs as UST yields and dollar rose slightly.

Oil: WTI and Brent slid for a fourth consecutive session, as swelling US crude stockpiles overshadowed Saudi Arabia's bullish pricing for Asian buyers.

Source: AmInvest Research - 7 Feb 2025