FX HIGHLIGHTS

Global: The dollar fell 0.33% to 97.282 despite market players staying optimistic over the Brexit deal due to lacklustre US-China trade negotiations. Equities markets fell with the Dow down 0.95% to 26,770 while S&P500 edged lower by 0.39% to 2,986. The UST10-year rose slightly by 0.18bps to 1.754% while gold prices dropped 0.12% to US$1,490.05/oz.

Both the euro and pound gained 0.38% to 1.117 and 0.72% to 1.298 respectively as hopes for a Brexit deal between the UK and EU could emerge. The UK lawmakers voted to put off a decision on the PM Boris Johnson’s deal, forcing him to ask the EU for another Brexit delay on 19 October. At this juncture, Johnson is legally obliged to ask for an extension and on 21 October, the government will once again bring to Parliament a meaningful vote on the Brexit deal that was secured last week with the EU. Also, there are growing odds that the Eurozone could be avoiding a recession. Crude oil price fell with both Brent and WTI losing 0.82% to US$59.42/bbl and 0.28% to US$53.78/bbl, respectively on concerns over China’s growth but losses were limited on hopes for progress towards a US-China trade agreement.

The yen strengthened against the weaker dollar by 0.19% to 108.5. The yuan fell slightly by 0.06% to 7.082 after 3Q2019 GDP grew at the slowest pace since in March 1992. The economy grew 6.0% y/y from 6.2% y/y in 2Q2019 which was itself the lowest.

Malaysia: The MYR fell 0.17% to 4.187. The KLCI shaved off 0.21% to 1,571.2. On the bond market, the MGS 3-year added 1.5bps to 3.135% while the 10- year yield eased 1bps at 3.415%. The 5- and 7-year yields remained unchanged at 3.245% and 3.360%, respectively. The 5-year IRS rose slightly by 0.5bp sto 3.305% while the 7-year was up 1.5bps to 3.360%. The 1- and 3-year IRS added 1bps each to 3.240% and 3.265%, respectively while the 10-year was muted at 3.420%. Elsewhere, the 3-month KLIBOR stood firm at 3.38%.

Against the major currencies, the MYR closed in the red; -0.35% to 4.657 vs. the EUR, -0.80% to 5.399 vs. the GBP, -0.39% at 3.861 vs. the JPY and -0.11% to 1.692 vs. the CNY. The MYR weakened against its regional peers; down 0.07% at 3.064 (SGD), 0.30% at 7.231 (THB), 0.22% at 3,379.3 (IDR), 0.34% to 12.25 (PHP) and 0.17% at 5,542.6 (VND).

MYR Outlook: We foresee the local currency fluctuating within our support levels of 4.1627 and 4.1712 with resistance pegged at 4.1919 and 4.2006.

Source: AmInvest Research - 21 Oct 2019