FX HIGHLIGHTS

Global: The dollar rose 0.30% to 97.352 after a report that Chinese officials were unsure if a longer-term trade deal with the US can be reached, one day after Fed Chairman Powell hinted a pause in its rate cut cycle given geopolitical risks had eased. As a result, buying into safe- haven assets increased with UST10-year yields slipping 8.05bps to 1.691%. Gold rose 1.16% to US$1,513/oz. Economic release includes: (1) September PCE down to 1.3% y/y from 1.4% y/y in August (cons: 1.4%); (2) September core PCE rose albeit at a slower pace of 1.7%y/y from 1.8% y/y in August (cons: 1.7%); (3) personal income slowed down to 0.3% m/m in September from 0.5% m/m in August (cons: 0.3%); and (4) September personal spending rose 0.2% m/m, unchanged from August. The equities market fell overnight despite betterthan-expected earnings from Facebook and Apple and the Fed's third rate cut of 2019. Investors turned their focus to the US-China trade negotiations. The Dow fell 0.52% to 27,046 while the S&P500 declined 0.30% to 3,038. The euro rose slightly by 0.01% at 1.115 after 3Q2019 GDP advance estimate came in better than expected, up 0.2% q/q from 0.1% q/q in 1Q2019 (cons: 0.1%). The pound climbed 0.31% to 1.294 as markets are pricing in lower likelihood of no-deal Brexit due to the anticipation of the Tories winning the 12 Dec general election. The Japanese yen rose by 0.75% to 108 due to safe-haven play while overshadowing Bank of Japan’s (BoJ) dovish tone during its MPC meeting yesterday. In line with the market’s and our expectations, the BoJ held its policy rate unchanged at -0.10% while maintaining the 10-year government bond yield at around 0%. However, it opened the door for potential interest rate cuts, slightly tweaking its forward guidance. The BoJ said it expects the borrowing cost “ to remain at their present level or lower levels”. The Chinese yuan strengthened 0.23% at 7.039 owing to a weaker dollar which overshadowed poor economic release: (1) NBS manufacturing PMI falling deeper into the contraction region to 49.3 in October from 49.8 in September; and (2) NBS non-manufacturing PMI easing to 52.8 in October from 53.7 in September. Brent slipped 0.63% to US$60.23/bbl while WTI fell sharper by 1.60% at US$54.15/bbl.

Malaysia: The MYR appreciated 0.05% to 4.178 against the dollar. The benchmark KLCI surged by 1.14% to 1,598 as local stocks tracked Asian share gains. The MGS trading activity picked up, seeing the 5-, 7- and 10-year yields easing 5bps to 3.320%, 5.5bps to 3.395% and 4bps to 3.420%, respectively. Meanwhile the 3-year MGS remained unchanged at 3.150%. Both the 3- and 5- year IRS fell 1bps each to 3.290% and 3.340% while the rest were muted at 3.290% (1-year), 3.390% (7-year) and 3.450% (10-year). The 3-month KLIBOR stood firm at 3.38%. Against the major currencies, the MYR closed in the red, falling 0.26% to 4.664 vs. the EUR, 0.30% at 5.405 vs. the GBP, 0.71% at 3.868 vs. the JPY and 0.18% to 1.685 vs. the CNY. Regionally, the ringgit traded mixed; (SGD) +0.07% to 3.069, (THB) -0.10% to 7.222, (IDR) +0.13% at 3,360.9, (PHP) -0.34% at 12.14 and (VND) +0.03% at 5,552.4.

MYR Outlook: We expect the local currency to move within our support levels of 4.1636 and 4.1692 while resistance is pegged at 4.1840 and 4.1903.

Source: AmInvest Research - 1 Nov 2019