• Dollar rebounds, trimming this week’s losses

• MYR to fluctuate in the range of 4.1459 and 4.1700 against US dollar

Global Highlights

The dollar index rose 0.23% to 93.770 following Fed official Christopher Waller’s statement on Thursday that the US central bank should trim its US$8tril balance sheet over the next couple of years. Also, economic data may have provided some much needed support to the currency. The number of new unemployment claims dropped to 290K, the lowest since March 2020 and below the market forecast of 300K. For the month of September, existing home sales climbed by 7% to 6.29mil compared to the August 2% contraction.

Equities were mixed. The Dow Jones fell 0.02% to 35,603 while the S&P 500 gained 0.30% to 4,550. The UST 10-year yield jumped 4.44% to 1.701%. Gold edged higher by 0.05% to US$1,783/oz.

The euro dropped 0.24% to 1.162. On the data front, the consumer confidence indicator in the euro area fell to -4.8 in October, broadly in line with market expectations of -5.0. In the EU as a whole, consumer sentiment fell by 0.9 point to -6.1.

The British pound was also on the losing side as it fell 0.22% to 1.379. Industrial output in the UK is slowing down as reported by the latest monthly CBI Industrial Trends Survey. The order book balance dropped by 13 points to +9 in October, well below market expectations of +18.

The Japanese yen strengthened by 0.28% to 113.99 amid concerns among investors which also led candidates from opposing parties to clash on issues surrounding the economy, with expectations that the ruling party will retain the majority in the lower house.

In the meantime, the Chinese yuan remained unchanged at 6.393 following renewed fears on Evergrande’s issue. The company has to pay US$83.5mil in bond coupons this weekend to avoid the risk of defaulting.

Crude oil took a break from its bullish trend as the Brent fell 1.41% to US$84.6 per barrel, while WTI lost 1.63% to US$82.5 per barrel. We suspect that the pullback was partly due to profit taking.

Malaysia Highlights:

The ringgit continued its climb for the second consecutive day as it strengthened 0.04% to 4.158. It was traded at a high of 4.1632 and low of 4.1525.

The FBM KLCI closed lower by 0.92% to 1,592. Local institutions were net sellers with RM112.1mil while being offset by retailers and foreign investors with RM95.4mil and RM16.8mil, respectively.

On the pandemic front, concerns re-emerged after hospitalization cases increased in Selangor, Putrajaya and Sarawak following the lifting of the interstate travel ban about 2 weeks ago.

The IRS yield curve shifted lower; the 3Y at -1.0bps to 2.645%, 5Y at -3.0bps to 2.930%, 7Y at -0.5bps to 3.195% and 10Y -2.0bps to 3.470%.

Against major currencies, the ringgit weakened vs. the EUR by 0.11% to 4.841, vs. the GBP by 0.01% to 5.734, vs. the JPY by 0.18% to 3.647, but strengthened against the CNY by 0.13% to 1.539 and against the AUD by 0.03% to 3.114. Regionally, the ringgit shone among its Asean peers. It appreciated vs. the SGD by 0.24% to 3.088, vs. the THB by 0.19% to 8.038, vs. the IDR by 0.37% to 3,396, and vs. the PHP by 0.21% to 12.236. It was flat vs. the VND at 5,471.

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 4.1700 and 4.1750.

Source: AmInvest Research - 22 Oct 2021