• PBoC keeps key lending rate unchanged

• MYR to fluctuate in the range of 4.1459 and 4.1775 against US dollar

Global Highlights

The dollar index continued its bearish movement, shedding 0.19% to 93.558 as the market was tilted to riskier assets yesterday.

Equities were bullish again on the back of upbeat earnings as the Dow Jones rose 0.43% to 35,609, touching its record high while the S&P 500 climbed 0.37% to 4,536. The UST 10-year benchmark yield increased for the fourth consecutive session by 1.95bps to 1.657%. Gold gained 0.72% to US$1,782/oz.

Tracking the dollar movement, the euro added 0.15% to 1.165. Among local data, the inflation rate in Euro area for September was at 3.4% y/y, the highest since 2008. Excluding volatile prices of energy, food, alcohol and tobacco, the core inflation rate climbed to 1.9% y/y, compared to August’s 1.6%.

Similarly, the British pound also climbed when it rose 0.20% to 1.382. The lower-yet-still-high September inflation data may have prompted investors to raise the bet that the BoE will hike interest rates sooner rather than later. On annual basis, the inflation rate slipped to 3.1% y/y, falling short of the market forecast of 3.2%, while core inflation rate edged lower to 2.9% y/y compared to 3.1% in August.

The Japanese yen strengthened marginally by 0.06% to 114.31 amidst pressure on the currency as the oil-dependent country has to sell more yen to buy oil and gas. Interestingly, we also saw Japan recording a trade deficit for two consecutive months. September’s figure stood at ¥622.7bil, compared to forecast of ¥519.2bil. Exports rose by 13% y/y while imports rose by 38.6%.

In the meantime, the Chinese yuan weakened by 0.16% to 6.393 following the injection of CNY100bil of cash into China’s financial system by the PBoC through daily market operations. The central bank also kept its one-year loan prime rate at 3.85% and five-year loan prime rate at 4.65%, unchanged for 18 straight months.

Crude oil remained in the green when data by the EIA showed that crude oil stocks in the US fell by 0.431mil as of 15 Oct which marked the first decline in four weeks. Brent climbed 0.87% to US$85.8 per barrel while WTI gained 1.10% to US$83.9 per barrel.

Malaysia Highlights:

The ringgit was back on the bullish side as it strengthened 0.24% to 4.160, although the situation remained fluid. It was traded with a high of 4.166 and low of 4.151.

The FBM KLCI inched up by 0.02% to 1,606. Detailed transactions revealed that local institutions were net sellers with RM243.9mil while both local retailers and foreign investors were net buyers at RM2.17mil and RM241.8mil, respectively.

Over in the local bond market, MGS yields were sent higher amidst a quiet trading day. The 3-year was +4.5bps to 2.630%, 5- year +1.0bps to 3.200%, 7-year +7.0bps to 3.520%, and 10-year +6.0bps to 3.610%. IRS yields also closed higher. (3Y) +3.0bps to 2.655%, (5Y) +1.0bps to 2.960%, (7Y) +1.5bps to 3.200%, (10Y) +2.0bps to 3.490%

Against major currencies, the ringgit strengthened against the GBP by 0.05% to 5.734, the AUD by 0.03% to 3.115, and the JPY by 0.26% to 3.640, but weakened against the EUR by 0.13% to 4.836, and the CNY by 0.26% to 1.537. Regionally, the ringgit appreciated against the THB by 0.27% to 8.022, the PHP by 0.29% to 12.210, and the VND by 0.23% to 5,471, but slipped 0.04% to 3.096 against the SGD. Meanwhile, the ringgit remained steady against the IDR at 3,384 as the Indonesian market was closed due to a public holiday.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1329 and 4.1459 while our resistance is pinned at 4.1775 and 4.1850.

Source: AmInvest Research - 21 Oct 2021