• Dollar pulls back following CPI data

• MYR to fluctuate in the range of 4.1480 and 4.1590 against US dollar

Global Highlights

The dollar index took a break from its bullish trend when it fell 0.46% to close at 94.08. The minutes from the last FOMC meeting in September indicated that the Fed could start tapering the bond buying programme in mid-November. However, consensus has not been reached over how high the inflation threat is and how soon the Fed may need to hike the interest rate. Data showed that the headline inflation edged higher to 5.4% y/y in Sep from 5.3% y/y in August and the beating market forecast of 5.3%. Excluding volatile prices of foods and energy, the core inflation remained unchanged at 4% y/y.

Equities were mixed when the Dow Jones remained flat at 34,378 while the S&P 500 closed higher by 0.30% to 4,364. UST 10- year yield benchmark tumbled sharply by 4.01bps to 1.537%. Gold rebounded as it rose 1.86% to US$1,793/oz.

The euro gained 0.56% to 1.159, retreating from its nearly 15-month low. The positive industrial output data may have provided some support to the common currency. Data showed that industrial production in the Eurozone grew by 5.1% in August y/y but recorded a decline of 1.6% on a monthly basis.

The British pound added 0.52% to 1.366 amidst upbeat monthly production data. According to the Office for National Statistics, industrial output in the UK grew in August at 0.8%, faster than the July’s 0.3% and forecast of 0.2%. In addition, the GDP in the three months to August expanded by 2.9%, which is the slowest pace since June. Other than that, the trade deficit widened to £3.7bil in August from £2.9bil during the previous month.

The Japanese yen appreciated 0.32% to 113.25. On the data front, the machinery orders unexpectedly declined by 2.4% during the month of August compared to July 2021. But they logged a healthy growth of 17% if compared to August 2020.

The Chinese yuan strengthened 0.32% to 6.428, after two consecutive bearish days. Among local data, China’s trade surplus widened to US$66.7bil in September from US$58.3bil in August.

Crude oil lost some steam after its recent upside trend. Brent lost 0.29% to US$83.2 per barrel and WTI shed 0.25% to US$80.4 per barrel.

Malaysia Highlights:

The ringgit extended its gains as it strengthened 0.11% to close at 4.160. The local currency was traded at a high of 4.1752 and low of 4.1582.

The FBM KLCI rose 1.04% to settle at 1,600, touching the highest point since Aug 2021. Detailed transactions showed that the foreign investors remained net buyers with RM261.9mil, while both local institutions and retailers were net sellers with RM245.8mil and RM16.1mil, respectively.

On the local bond market, yields were mixed as the 3-year was +1.5bps to 2.545% while the 5-year was -2.0bps to 3.140%, 7- year -2.0bps to 3.500% and 10-year -1.0bps to 3.620%.

The IRS curve shifted lower; the 3Y was -1.5bps to 2.605%, 5Y -3.8bps to 2.927%, 7Y -3.7bps to 3.148% and 10Y -3.0bps to 3.460%.

Against major currencies, the ringgit rose vs. the EUR by 0.10% to 4.808, vs. the AUD by 0.33% to 3.058, and vs. the CNY by 0.03% to 1.549 but weakened vs. the GBP by 0.01% to 5.669 and vs. the JPY by 0.20% to 3.673. Against its Asean peers, the ringgit depreciated vs. the SGD by 0.07% to 3.075, vs. the THB by 0.29% to 7.978, and vs. the PHP by 0.12% to 12.186, but it appreciated against the IDR by 0.11% to 3,418 and the VND by 0.12% to 5,469.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1330 and 4.1480 while our resistance is pinned at 4.1590 and 4.1650.

Source: AmInvest Research - 14 Oct 2021