• Focus on BoJ and ECB amidst elevated inflationary pressure

• MYR to fluctuate in the range of 4.1420 and 4.1550 against US dollar

Global Highlights

The dollar index edged lower by 0.16% to 93.802. Among local data, new orders for US durable goods declined 0.4% m/m in September compared to August’s 1.3% growth (cons. -1.1%). All eyes will focus on 3Q 2021 preliminary GDP data that is due to be released later tonight for a clearer picture on the US economy.

Equities retreated from their record highs when the Dow Jones fell 0.74% to 35,491 while S&P 500 dropped 0.51% to 4,552. The UST 10-year yield slipped 6.6bps to 1.541%. Gold gained 0.22% to settle at US$1,797/oz.

Reflecting the dollar, the euro gained marginally by 0.06% to 1.160. Among local data, money supply M3 in the Euro Area increased to €15.2tril in September from €15.1tril in August of 2021. Investors will look forward to the ECB meeting that is scheduled to take place today.

The British pound lost 0.16% to 1.375 as investors digested the UK’s annual budget announced yesterday. Finance Minister Rishi Sunak told parliament that the British economy is projected to grow faster in 2022, while lowering the unemployment rate and budget deficit. The GDP was forecast to grow at 6.5% this year and 6.0% during 2022.

The Japanese yen pared its Tuesday’s losses when it strengthened 0.29% to 113.83. The BoJ is set to announce its key interest rate decision today after a two-day monetary policy meeting that started on Wednesday.

In the meantime, the Chinese yuan weakened by 0.14% to 6.392 amidst tight month-end liquidity, as reported by Reuters. Also, the US has banned China Telecom Corp's licence in the US over national security concerns which showed that broad concerns about Beijing persisted in Washington.

Crude oil tumbled sharply by more than 2% following the EIA’s data that showed a larger-than-expected build-up US crude oil inventories; it rose by 4.26mil barrels during the week ending 22 October, up from 0.43mil barrels decline in the previous period and higher than market forecast of 1.91mil barrels increase. Brent dropped 2.11% to US$84.6 per barrel while WTI fell 2.35% to US$82.7 per barrel.

Malaysia Highlights:

Our local currency lost its bullish steam as it weakened 0.20% to 4.155. The ringgit was traded at a high of 4.1563 and low of 4.1458.

The FBM KLCI extended its downward trend as it edged lower by 0.07% to 1,583. Detailed transactions showed that local institutions were sole net sellers with a position of RM132.1mil, while being offset by local retailers and foreign investors with RM74.2mil and RM57.9mil, respectively.

Over to the local bond market, yields were mostly unchanged as traders took to the sidelines ahead of Friday’s Budget 2022 and BNM MPC meeting that will be held next week. Both the 3-year and 5-year remain unchanged at 2.635% and 3.140% in that order, while the 7-year was -2.0bps to 3.450% and 10-year -0.5bps to 3.595%.

The IRS yield curve flattened when the (3Y) +2.7bps to 2.695%, (5Y) +0.5bps to 2.950%, (7Y) +4.0bps to 3.260%, but the (10Y) - 8.5bps to 3.415%.

Against major currencies, the ringgit was mixed. It strengthened against the EUR by 0.01% to 4.816, and the GBP by 0.33% to 5.700 but weakened against the AUD by 0.23% to 3.116, against the JPY by 0.45% to 3.649, and against the CNY by 0.06% to 1.539. Regionally, the ringgit appreciated; vs. the SGD by 0.08% to 3.078, but depreciated; vs. the IDR by 0.06% to 3,411, vs. the PHP by 0.18% to 12.215, and vs. the VND by 0.21% to 5,477. However, the ringgit remained stable against the THB at 8.012.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1375 and 4.1420 while our resistance is pinned at 4.1550 and 4.1605.

Source: AmInvest Research - 28 Oct 2021