• Risk-on sentiment permeates global market

• MYR to fluctuate in the range of 4.1480 and 4.1644 against US dollar

Global Highlights

The dollar index edged lower by 0.02% to 93.937 as the risk-on sentiment in the market recovered. The dollar may also have been supported by the unexpected strong retail data. Reports showed that September retail sales grew by 0.7% compared to the market expectations of 0.2% contraction. On the other hand, the University of Michigan’s consumer sentiment dropped to 71.4 for October from 72.8 and below the market forecast of 73.1.

Equities extended its gains when the Dow Jones rose 1.09% to 35,295 while the S&P 500 climbed 0.75% to 4,471. The UST 10- year yield rebounded as it gained 5.9bps to 1.570%. Gold tumbled sharply by 1.57% to US$1,768/oz.

The euro rose 0.03% to 1.160. Among local data, the euro area’s trade surplus narrowed significantly to €4.8bil for August from €20.7bil in July.

The British pound strengthened 0.57% to 1.375. Concerns are mounting on the UK economy over surging energy prices and a shortage of workers.

The Japanese yen continued to be on the losing side when it depreciated 0.48% to 114.22, approaching a level has not been seen since 2017. This is amid the BoJ's decision of not reversing its accommodative stimulus amidst recovering risk sentiment.

In the meantime, the Chinese yuan inched higher by 0.06% to 6.436. Investors await today’s GDP data for more insight on Beijing's policy outlook.

Crude oil continued its rally as Brent climbed 1.02% to US$84.9 per barrel while the WTI added 1.19% to US$82.3 per barrel over signs of a market demand and supply mismatch.

Malaysia Highlights:

The ringgit took a break from its six-day rally as it weakened by 0.08% to 4.158. It was traded at a high of 4.1602 and low of 4.1543. The FBM KLCI edged higher by 0.36% to close at 1,598. Local transactions showed that foreign investors were net buyers at RM303.2mil, while local institutions and retailers were net sellers, raking up RM221.1mil and RM82.2mil, respectively.

Meanwhile, National Recovery Council chairman Tan Sri Muhyiddin Yassin stated on Friday that the government is mulling the opening of the country's borders to fully vaccinated international travellers from selected countries without the need for quarantine.

Over in the local bond market, most yields remained stable. The 3-year, 5-year and 7-year stayed unchanged at 2.550%, 3.120%, 3.430%, respectively, while the 10-year was at -1.5bps to 3.545%.

The IRS yield curve shifted higher for most of durations – the 5Y +1.0bps to 2.895%, 7Y +2.3bps to 3.140%, 10Y +1.5bps to 3.380% while the 3Y was flat at 2.585%.

Against major currencies, the ringgit mostly weakened; vs. the EUR by 0.03% to 4.825, vs. the GBP by 0.19% to 5.706, vs. the AUD by 0.16% to 3.084, vs. the CNY by 0.18% to 1.547, but it strengthened against the JPY by 0.45% to 3.638. Regionally, the ringgit was mixed. It appreciated vs. the THB by 0.29% to 8.007, and vs. the PHP by 0.08% to 12.198, but depreciated vs. the SGD by 0.09% to 3.084, vs. the IDR by 0.43% to 3,384, and vs. the VND by 0.02% to 5,475.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1400 and 4.1480 while our resistance is pinned at 4.1644 and 4.1785.

Source: AmInvest Research - 18 Oct 2021