Global: The dollar rose slightly by 0.05% to 97.328. Trade discussions between the US and China are making substantial progress as pointed out by Chinese Vice Premier Liu He. Besides, the prospects of a no-deal Brexit has also eased. Furthermore, US companies are expected to continue to report better-than-expected earnings. The Dow rose by 0.21% to 26,828 while S&P500 gained 0.69% to 3,007. The UST10-year added 4.57bps to 1.799% while gold prices fell 0.37% to US$1,484.50/oz. Meanwhile, the pound fell by 0.18% to 1.296 due to growing expectations that the UK Parliament will likely approve a Brexit deal. The euro fell 0.15% to 1.115 due to a weaker dollar. The Japanese yen weakened by 0.16% to 108.6 while the Chinese yuan rose 0.12% to 7.073 against the dollar.

In the commodities market, Brent price closed lower by 0.77% to US$58.96/bbl while WTI dropped 0.87% to US$53.31/bbl as investors failed to shake worries that growing signs of economic weakness will eventually hurt demand for crude oil. On top of that, signs that some major producers not adhering to production agreements are also weighing on sentiment. Russia failed to comply to its commitments in September to curb production, citing increases in natural gas condensate production ahead of winter. The current output pact between Opec and its allies to cut 1.2 million barrels a day runs through March 2020. Meanwhile, Kuwait and Saudi are in discussion to restart production in oil fields that they manage jointly, which could deliver some 500,000 barrels a day in crude, pressuring prices. The fields Khafji and Wafra have been shut for the past four years.

Malaysia: The MYR rose 0.13% to 4.181 against the dollar. The KLCI fell slightly by 0.01% to 1,570.9. In the MGS market, the 3-year yield added 1.5bps to 3.135% while the 5- and 7-year rose 1bps each to 3.255% and 3.370%, respectively. The 10-year MGS was muted at 3.415%.

The 5- and 10-year IRS remained unchanged at 3.305% and 3.420%. Meanwhile the 3-year fell 0.5bps to 3.260%. The 1- and 7-year IRS rose 0.5bps each to 3.245% and 3.365%, respectively. Elsewhere, the 3-month KLIBOR stood firm at 3.38%. Against the major currencies, the MYR rose 0.31% to 3.850 vs. the JPY and 0.01% to 1.692 vs. the CNY while it fell 0.26% at 4.669 vs. the EUR and 0.51% at 5.426 vs. the GBP. Regionally, the MYR appreciated; (THB) 0.12% at 7.240 and (VND) 0.13% to 5,549.8. However, the ringgit weakened; (SGD) 0.25% at 3.072, (IDR) 0.34% at 3,367.7 and (PHP) 0.23% to 12.22.

MYR Outlook: In our view, corporate earnings season will continue to take the center stage again. At the same time, focus will be on trade and Brexit. Hence, we foresee MYR to trade between our support levels of 4.1704 and 4.1750 while our resistance is pegged at 4.1888 and 4.1940.

Source: AmInvest Research - 22 Oct 2019