• Dollar starts week higher; central banks in focus

• MYR to fluctuate in the range of 4.1400 and 4.1650 against US dollar

Global Highlights

The dollar index closed higher as it rose 0.18% to 93.813. The movement seemed tepid as the market is seeking signs of interest rate moves.

Equities were in the green as the Dow Jones rose 0.18% to 35,741 while the S&P 500 climbed 0.47% to 4,566. The UST 10-year yield benchmark dipped 0.17bps to 1.631%. Gold added 0.84% and breached US$ 1,800/oz level.

Reflecting the stronger dollar, the euro fell 0.30% to 1.161. Among local data, the Ifo Business Climate headline indicator for Germany dropped to 97.7, the lowest since April 2021, falling short of the forecast of 97.9.

The British pound conversely gained 0.09% to 1.377. On the political front, all eyes turn to British finance minister Rishi Sunak's budget due Wednesday.

The Japanese yen weakened by 0.19% to 113.71 ahead of BoJ’s meeting on Thursday. The index of leading economic indicators in Japan, which is a gauge of the economy several months ahead and compiled using data such as job offers and consumer sentiment, was revised downwards to 101.3 in August from a preliminary figure of 101.8.

In the meantime, the Chinese yuan weakened marginally by 0.01% to 6.386 amidst speculations that the PBoC will likely step in should the currency rises above the 6.35 mark.

Crude oil further rallied when the Brent increased by 0.54% to US$86 per barrel while WTI remained steady at US$83.8 amidst tight global supply and stronger demand.

Malaysia Highlights:

The ringgit closed marginally stronger by 0.02% to 4.150 and was traded at a high of 4.1552 and low of 4.1485.

The local bourse’s FBM KLCI closed lower by 0.01% to 1,587.94 from 1,588.08 on last Friday, driven by net buying positions of retailers at RM36.4mil and foreign investors at RM52.8mil. Local institutions were net sellers at RM89.3mil.

On Monday, Prime Minister Datuk Seri Ismail Sabri Yaakob launched the National Trade Blueprint or NTBP, a plan to increase Malaysia’s trade competitiveness through improved business ecosystem. The blueprint’s framework is also outlined a 5-year (2021–2025) development strategy and initiatives to enhance Malaysia’s trade competitiveness, specifically in the exports of merchandise.

Over to the local bond market, the yield curve flattened when the 3-year yield +2.5bps to 2.645% while 5-year was -1.0bps to 3.170%, 7-year -0.5bps to 3.475% and 10-year -0.5bps to 3.620%.

The IRS yield curve was mixed when the 3Y +2.0bps to 2.675% and 7Y +4.0bps to 3.240% while the 5Y was -0.5bps to 2.945% and 10Y -2.0bps to 3.480%.

Against major currencies, the ringgit rose across the board. It strengthened against the EUR by 0.16% to 4.825, the GBP by 0.34% to 5.715, the AUD by 0.39% to 3.104, the JPY by 0.24% to 3.649, and the CNY by 0.07% to 1.539. Regionally, the ringgit was mixed against its Asean peers. It depreciated vs. the THB by 0.90% to 7.964, and vs. the PHP by 0.10% to 12.220 but appreciated vs. the SGD by 0.02% to 3.088, vs. the IDR by 0.27% to 3,412 and vs. the VND by 0.02% to 5,483.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1300 and 4.1400 while our resistance is pinned at 4.1650 and 4.1725.

Source: AmInvest Research - 26 Oct 2021