• Dollar pulls back, tracking US Treasury yields

• MYR to fluctuate in the range of 4.1703 and 4.1826 against US dollar

Global Highlights

The dollar index extended its losses for the second consecutive session as it fell 0.21% to 94.035 amid a heavy economic data release day and as the risk of the US government shutting down was averted for now. The US manufacturing sector remained healthy with the IHS Markit headline figure declining to 60.7 for September, down than August’s print but remained elevated above the 50 growth mark. On the other hand, the ISM Index rose to 61.1, above the forecast of 59.6. We also saw positive personal spending and income with the former growing 0.8% m/m while the latter gained 0.2% m/m. Inflation was still running hot in August with the PCE growth rate at 0.4% m/m, unchanged from July’s rate. In addition, the University of Michigan’s consumer sentiment rebounded to 72.8 from its 12-month low in August.

Equities rose when the Dow Jones climbed 1.43% to 34,326 and the S&P 500 added 1.15 to 4,357. The UST 10-year yield benchmark fell 2.57bps to 1.462%. Gold rose 0.23% to settle at US$1,761/oz.

The euro gained 0.14% to 1.160, tracking the stronger dollar. In Eurozone, the headline PMI by IHS Markit remained relatively unchanged as it fell to 58.6 compared to 58.7 from the previous month. Aside from that, inflation accelerated to 3.4%, the highest since 2008 despite that the ECB stating that the inflation was transitory.

The British pound reversed its bearish trend when it rose 0.53% to settle at 1.355. The UK’s manufacturing sector was still expanding albeit at a slower rate. The Markit/CIPS Manufacturing PMI slid to 57.1 from 60.3.

The Japanese yen extended its winning streak as it strengthened by 0.22% to 111.05 amid positive economic data released. The Tankan Large Manufacturers Index for 3Q21 jumped to 18 from 14, while the Jibun Bank Manufacturing PMI fell to 51.5 from 52.7. On the labour market, the unemployment rate remained unchanged at 2.8%.

In the meantime, the Chinese yuan remained unchanged at 6.445 amidst a five-day holiday.

Crude oil rallied when Brent added 0.97% to US79.3 per barrel and WTI gained 1.13% to US$75.9 per barrel. This is ahead of the OPEC+ meeting on Monday where it will decide whether to boost production by 400K bpd or more in November and December.

Malaysia Highlights:

By the end of the week, the ringgit has risen by 0.17% to 4.179 amidst the bullish dollar. Meanwhile, the manufacturing sector in Malaysia saw a smaller contraction as suggested by the increasing headline Markit Manufacturing PMI to 48.1.

Bursa Malaysia’s transactions showed that local institutions and retail investors were both net buyers with RM142.7mil and RM90.9mil, respectively. Foreign investors, meanwhile, were net sellers with RM233.6mil.

The local bond market saw profit-taking., sending the yields broadly higher. The 3-year added +1.5bps to 2.470%, 7-year added +2.5bps to 3.320% and 10-year rose +3.0bps to 3.395% while the 5-year fell 0.5bps to 2.920%.

The IRS yield curve flattened when the (3Y) fell 2.0bps to 2.430%, (5Y) dropped 3.0bps to 2.755%, (7Y) fell 4.5bps to 2.930% while the (10Y) declined 2.3bps to 3.195%.

Against major currencies, the ringgit was mixed when it depreciated against; the GBP by 0.10% to 5.632, the AUD by 0.29% to 3.023, the JPY by 0.04% to 3.762, but strengthened against the EUR by 0.33% to 4.839 and the CNY by 0.18% to 1.542. Against its Asean peers, the ringgit mostly strengthened; vs. the THB by 0.14% to 8.044, vs. the IDR by 0.14% to 3,424, vs. the VND by 0.15% to 5,445, but weakened against the SGD by 0.01% to 3.077 and the PHP by 0.21% to 12.154.

MYR Outlook For The Day

We expect the MYR to trade between the support of 4.1624 and 4.1703 while resistance is pinned at 4.1826 and 4.1904.

Source: AmInvest Research - 4 Oct 2021