• Crude oil continues to rally to multi-year high

• MYR to fluctuate in the range of 4.1653 and 4. 1829 against US dollar

Global Highlights

The dollar edged higher as it rose 0.21% to 93.975 amid concerns on the US debt limit. According to the Treasury Secretary Janet Yellen, the US will face recession if debt limit issue does not resolve within two weeks.

Final figure for IHS Markit Services and Composite PMI both logged lower reading in September compared to August’s figure. In addition, the IBD/TIPP Economic Optimism Index slipped to 46.8 in October from 48.5 in September. On the other hand, the ISM Non-Manufacturing print logged higher over the same month.

Equities were closed higher when Dow Jones gained 0.92% to 34,315 while the S&P500 increased by 1.05% to 4,346. The UST 10-year yield benchmark rose sharply by 4.7bps to close at 1.526%. Gold fell 0.53% to US$1,760/oz.

The Euro fell 0.20% to 1.160 despite lower Composite and Services PMI figure for September compared to the previous month’s print, according to the IHS Markit report. This is the second month of decline since August 2021.

Meanwhile, the British pound outperformed against the greenback as it rose 0.14% to 1.363 amidst the ongoing energy crisis. The non-manufacturing sector in the UK had slower growth in September as suggested by the IHS Markit Services and Composite PMI. The headline reading rose marginally to 55.4 for the former (Aug: 54.8), and to 54.9 for the latter (Aug: 55.4).

The Japanese yen weakened by 0.48% to 111.46. On the data front, we saw marked improvement in the non-manufacturing sector in Japan as the IHS Markit PMI for Services rose 47.8 from 42.9 while for the Composite sectors jumped to 47.9 from 45.5.

In the Meantime, the Chinese Yuan Remained Unchanged at 6.445.

Crude oil soared to multi-year high when Brent added 1.60% to settle at US$82.6 per barrel, highest since 2018, and WTI rose 1.69% to close at US$78.9 per barrel, a seven-year high. This was after OPEC+ countries decided to stick with its initial plan rather than increasing its output.

Malaysia Highlights:

The ringgit closed weaker by 0.11% to 4.179. It traded with high of 4.1823 and low of 4.1727. On the pandemic development, 88% of adult population have been vaccinated as of Tuesday, almost reaching the target for easing interstate travel restriction of 90%.

KLCI added 0.52% to close at 1,530 points, driven by the net buying from local retailers with RM23.9mil, offset by local institutions and foreign investors selling with RM13.6m and RM10.3m, respectively.

On the local bond market, the yield curve shifted higher especially on the belly part. The 3-year +1.0bps to 2.460%, 5-year +1.0bps to 2.930%, 7-year +3.5bps to 3.345%, and 10-year +5.0bps to 3.445%.

IRS curve shifted higher again when (3Y) +4.8bps to 2.485%, (5Y) +2.5bps to 2.800%, (7Y) +3.0bps to 2.975% and (10Y) +2.5bps to 3.220%.

Against major currencies, the ringgit depreciated against; EUR by 0.06% to 4.849, GBP by 0.57% to 5.692, AUD by 0.27% to 3.043, CNY by 0.10% to 1.542 but appreciated against JPY by 0.38% to 3.749. Against its Asean peers, the ringgit weakened across the board. It fell; vs. SGD by 0.19% to 3.080, vs. THB by 0.05% to 8.083, vs. IDR by 0.21% to 3,411, vs. PHP 0.19% to 12.122, and vs. VND by 0.07% to 5,446. .

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1558 and 4.1653 while our resistance is pinned at 4.1829 and 4.1915.

Source: AmInvest Research - 6 Oct 2021