FX HIGHLIGHTS

Global: The dollar stayed largely muted on Friday due to mixed bag of September labour market data. It depreciated marginally by 0.06% to 98.808. Labour data includes: (1) Sep non-farm payroll up 136K jobs from 168K job in Aug (cons: 145K); (2) Sep wage growth slowed down to 2.9% y/y from Aug’s 3.2% y/y (cons: 3.2%); and (3) Sep unemployment rate tightened further to 3.5% from 3.7% in Aug (cons: 3.7%) due to a weaker labour supply – such figure was last seen in Dec 1969. Aug’s trade deficit widened to US$54.9bil from US$54.0bil in July. Both the Dow and S&P500 were up 1.42% to 26,574 and 2,952, respectively.

• The UST10-year fell 0.51bps to 1.529% while gold prices fell 0.04% to US$1,504.66/oz. Nevertheless, with the underlying labour market data broadly steady, market pared back some expectations of October rate cut from roughly 87% at its peak to 72.9%. However, we remain cautious ahead of October’s labour data due to the headwind from the ongoing strike among 48,000 employees at General Motors.

• The euro appreciated by 0.13% to 1.098 while the pound weakened slightly by 0.01% to 1.233 as concerns over whether Britain can agree a Brexit deal with the EU later this month. The Japanese yen dropped by 0.02% to 106.9 while the Chinese yuan was unchanged at 7.148.

Malaysia: The MYR rose slightly by 0.04% to 4.185. The KLCI lost 0.41% to 1,557.7. On Friday, there was tepid buying seen in the MGS market; the 3-year yield fell 1bps to 3.110% while the 5-, 7- and 10-year yields remained unchanged at 3.210%, 3.315% and 3.285%, respectively.

• The 5-year interest rate swap (IRS) eased 2.5bps to 3.270% while the 1-, 3-, 7- and 10-year IRS fell 0.5bp at 3.270%, 1bp at 3.250%, 3.5bps to 3.305% and 1.5bps to 3.365%, respectively. The 3-month KLIBOR stood firm at 3.38%. Crude commodity prices surged with Brent up 1.14% to US$58.37/bbl and WTI gained 0.69% to US$52.81/bbl.

• Against the major currencies, the MYR rose 0.05% to 3.914 vs. the JPY and 0.04% to 1.708 vs. the CNY while it slipped 0.07% to 5.159 vs. the GBP and 0.05% to 4.592 vs. the EUR. The MYR was weaker vs. the SGD 0.17% at 3.034, THB 0.32% at 7.273 and IDR 0.21% at 3,378.1 but higher vs. the PHP 0.02% to 12.38 and VND 0.06% at 5,543.8.

• MYR outlook: On that note, we expect the MYR to trade between our support level of 4.1743 and 4.1680 while our resistance is pinned at 4.1929 and 4.1979.

Source: AmInvest Research - 7 Oct 2019