FX HIGHLIGHTS

Global: The dollar fell slightly by 0.07% to 97.764 partly due to the weaker-than-expected Dallas Fed manufacturing index for October which came in at -5.1 from +1.5 in September (cons: +1.4). Both the Dow and S&P500 gained 0.49% to 27,091 and 0.56% to 3,039, respectively as investors walked into another busy week of earnings and a Federal Reserve policy meeting that’s expected to deliver another cut to interest rates. The UST10-year yield rose 4.77bps to 1.842% while gold lost 0.81% to US$1,493/oz. Meanwhile, the focus shifted to Brexit developments as the EU granted a ‘flextension’ to the UK until 31 January 2020 – but could leave sooner if a deal is ratified.

Meanwhile, the pound rose 0.28% to 1.286, especially after British lawmakers rejected the government’s request to hold a general election on 12 December. Nevertheless, the UK government will try again with a new route for election in a vote on Tuesday to “get Brexit done”. The euro strengthened 0.18% to 1.110. The Japanese yen dropped 0.26% to 109.0. The Chinese yuan fell slightly by 0.04% to 7.068 mainly due to lower industrial profits (YTD) at -2.1% y/y in September from -1.7% y/y in August.

Brent price slid 0.73% to US$61.57/bbl while WTI plunged 1.50% to US$55.81/bbl as worries about weak Chinese industrial data overshadowed hopes on a higher oil demand as talks progress on a USChina trade deal.

Malaysia: Ahead of a long weekend following the Deepavali festive season, the MYR rose slightly by 0.01% to 4.185 on Friday. The KLCI slipped 0.07% to 1,570.0. Trades in the local bond market were largely subdued with the MGS 5-year yield adding 2.5bps to 3.290% while the 3-, 7- and 10-year yields remained unchanged at 3.155%, 3.450% and 3.460%, respectively. The 5-year IRS was muted at 3.320% while the 3-, 7-, and 10-year IRS rose 0.1bps to 3.265%, 1bps to 3.375% and 0.5bps to 3.435%. The 1-year IRS however, eased slightly by 0.2bps to 3.265%. Elsewhere, the 3-month KLIBOR stood firm at 3.38%.

Against the major currencies, the MYR rose mostly by; 0.30% to 4.641 vs. the EUR, 0.13% at 5.367 vs. the GBP, 0.28% to 3.840 vs. the JPY and 0.04% at 1.689 vs. the CNY. Among its Asean peers, the MYR traded mixed, seeing; (SGD) unchanged at 3.072, (THB) +0.21% at 7.224, (IDR) -0.13% at 3,350.5, (PHP) -0.19% at 12.22 and (VND) unchanged at 5,542.8.

MYR Outlook: We foresee the MYR trading within our support levels of 4.1717 and 4.1777 while our resistance is pegged at 4.1950 and 4.2013. Our focus will be on the US-China trade talks which remain on a positive note and are expected to come close to completing some sections of an agreement with Chinese negotiators. Besides, the better-than-expected US corporate results and hopes that the UK will leave the European Union in an orderly fashion will continue to influence the market. Finally, we expect the US Fed to deliver another 25-basis- point cut to its benchmark interest rate when policymakers conclude a two-day meeting on Wednesday.

Source: AmInvest Research - 29 Oct 2019