Global: The dollar fell by 0.12% to 97.239 owing to trade optimism added with mixed set of data release. Trade optimism reignited after both US and China negotiators reportedly made progress after their Friday evening phone call, citing reaching “consensus on principles” about an interim trade agreement. Meanwhile, data release were rather mixed with (1) Oct NFP slowed down less than expected to 128K from 180K in Sep (cons: 89K); (2) Oct unemployment rate edged higher to 3.6% from 3.5% in Sep; (3) Oct wage growth rose 0.2% m/m versus 0.0% m/m in Sep (cons: 0.3%); (4) Oct participation rate rose higher to 63.3% compared to 63.2% in Sep; and (5) Oct ISM Manufacturing PMI edged slightly higher to 48.3 from 47.8 in Sep (cons: 48.9). The jobs data remains solid despite weak signals from ISM/PMI employment. The Dow surged 1.11% to 27,347 while S&P500 rose 0.97% to 3,067. UST10-year however added 1.93bps to 1.710% while gold rose 0.09% to US$1,514/oz.

The euro gained by 0.13% to 1.117 due to a weaker dollar. The pound rose slightly by 0.03% to 1.295 as Conservatives leads the poll added with better than expected Manufacturing PMI which rose to 49.6 in Oct from 48.3 in Sep (cons: 48.1). The jump was supported by stock-building and purchasing activities as they prepare for the October Brexit, which was later postponed to end January 2020. However, output, new orders, and employment continued to fall. In this week’s BoE MPC meeting scheduled on 7 November, the policy makers will most likely keep rates unchanged at 0.75% as Brexit uncertainties remains.

The Japanese yen fell 0.15% to 108.2 following lower demand for safe haven assets and poor economic release i.e. (1) Sep unemployment rate edged higher to 2.4% from 2.2% in Aug (cons: 2.3%); and (2) Oct Jibun Bank Manufacturing PMI deteriorated further to 48.4 from 48.9 in Sep (cons: 48.5), marking six straight months of contraction and the weakest since June 2016. The lackluster manufacturing activities was due to the impact of the typhoon amid ongoing slowing global growth. Chinese yuan rose slightly by 0.07% to 7.034 after October Caixin Manufacturing PMI rose unexpectedly to 51.7 versus 51.4 in September (cons: 51.0), the strongest expansion since February 2017. However, October’s manufacturing PMI fell to an eight months low of 49.3.

Brent gained 2.42% to US$61.69/bbl while WTI rose sharper by 3.73% to US$56.20/bbl on signs of progress in US-China trade talks.

Malaysia: The MYR rose 0.31% to 4.165. The KLCI fell 0.29% to 1,593. On the local bond space, the MGS 3- and 5-year yields eased 2.5bps to 3.125% and 4bps to 3.280% while both the 7- and 10-year yields fell 2bps each to 3.375% and 3.400%, respectively. The 3-, 5- and 7-year IRS slipped 0.5bp at 3.285%, 2bps at 3.320% and 3.5bps to 3.355. The 1- and 10-year IRS remained unchanged at 3.290% and 3.450%. Elsewhere, the 3-month KLIBOR stood firm at 3.38%.

Against the major currencies, the MYR appreciated mostly; 0.35% to 4.647 vs. the EUR, 0.16% at 5.396 vs. the GBP, 0.46% to 3.850 vs. the JPY and 0.24% at 1.689 vs. the CNY. Among its Asean peers, the MYR rose; (SGD) 0.09% at 3.066, (THB) 0.34% at 4.247, (IDR) 0.28% to 3,370.4, (PHP) 0.03% to 12.15; and (VND) 0.32% to 5,570.1.

MYR Outlook: With fairly decent data over the weekend and some positive light seen on the trade discussion between the US and China we foresee appetite for MYR to remain strong. The local currency is likely to trade between our support levels of 4.1591 and 4.1623 while our resistance is pegged at 4.1676 and 4.1715. Should the currency strengthen and surpass the 4.16 level, there is strong room for MYR to reach 4.10 to 4.12 levels. On the OPR outlook which BNM will be meeting on November 5, our view is that BNM is expected to hold OPR at 3.00%.

Source: AmInvest Research - 4 Nov 2019