• Dollar expected to be tepid ahead of Fed’s meeting

• MYR to fluctuate in the range of 4.1376 and 4.1533 against US dollar

Global Highlights

The greenback trimmed its biggest gains in months on Friday as it declined by 0.26% to close at 94.123 amidst increasing expectations that the Fed will raise interest rate sooner than expected. Local data showed that the us manufacturing sector is still growing healthily albeit at slower pace. IHS Markit reported that the headline PMI dropped to 58.4 in October from September’s 60.7, its lowest since July, while the ISM edged lower to 60.8 from 61.1 over the same period. It is widely expected that the Fed will lay out the asset trimming plan during its meeting this Wednesday.

Equities hit new highs when the Dow Jones advanced 0.26% to 35,914 while the S&P5 00 rose 0.18% to 4,614. The UST 10-year yield benchmark edged higher by 0.36bps to 1.556% as investors remained cautious ahead of the key US Fed meeting. Gold rebounded as it rose by 0.56% to US$1,793/oz.

The euro gained 0.42% to close at 1.161 after it touched its weakest point since mid-October on Friday.

The British pound dropped by 0.12% to its two-week low at 1.367. Investors are weighing whether the Bank of England will raise interest rate during its meeting this Thursday after several policymakers, including the governor Andrew Bailey, pushed for higher cost of money due to surging inflation. However, a split vote is still possible and it could lead to an unchanged rate. On the data front, the IHS Markit/CIPS UK Manufacturing PMI stood at 57.8 in October and above September’s 57.1.

The Japanese yen strengthened marginally by 0.12% and closed at 114.00 following the ruling Liberal Democratic Party of Japan's victory in the lower house election, strengthening Prime Minister Fumio Kishida’s position. The final Jibun Bank Manufacturing PMI showed that the Japanese manufacturing sector is maintaining its growth progress as the headline logged a higher reading at 53.2 in October from 51.5 in September.

In the meantime, the Chinese yuan appreciated by 0.12% to 6.398 following the higher-than-expected manufacturing PMI reading. The report by Caixin showed that the headline figure rose to a four-month high of 50.6 in October, stronger than forecasts and September’s figure of 50.

Crude oil extended its winning position when the Brent added 0.39% to US$84.7 per barrel while the WTI climbed 0.57% to US$84.1 per barrel. Major oil consuming countries such as Japan and India are putting diplomatic pressure on the OPEC+ cartel to increase production ahead of its Thursday meeting.

Malaysia Highlights:

The ringgit was closed weaker when it depreciated by 0.27% to 4.152 and was traded at a high of 4.1518 and low of 4.145.

The FBM KLCI tumbled by 2.01% or 31 pts to 1,531 as investors and traders digested Budget 2022 that was tabled in the parliament on Friday. Detailed transactions showed that both retailers and foreign investors were net buyers with RM314.3mil and RM14.9mil amount, respectively, while being offset by local institutional players with a RM329.2mil net selling position.

Over to the local bond market, the yield curve flattened as the shorter duration’s yield surged compared to longer term papers. The 3-years was at +9.0bps to 2.810%, 5-years +4.5bps to 3.285%, 7-years +9.0bps to 3.530%, and 10-year +2.0bps to 3.600%.

The IRS yield curve also flattened when the (3Y) +3.5bps to 2.865%, (5Y) +1.0bps to 3.065%, (7Y) +0.5bps to 3.275%, but the (10Y) -3.0bps to 3.470%.

Against major currencies, the ringgit mostly outshined others as it appreciated against the EUR by 0.47% to 4.802, the GBP by 0.67% to 5.667, and the AUD by 0.19% to 3.115, but depreciated against the CNY by 0.39% to 1.541, and against the JPY by 0.32% to 3.643. Regionally, the ringgit rose vs. the SGD by 0.21% to 3.072, vs. the IDR by 0.48% to 3,438, but weakened vs. the THB by 0.37% to 8.017, and vs. the VND by 0.27% to 5,481. The ringgit however, remain stable against the PHP at 12.171.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1324 and 4.1376 while our resistance is pinned at 4.1533 and 4.1615.

Source: AmInvest Research - 2 Nov 2021