• Dollar strengthens ahead of Fed, BoE meetings

• MYR to fluctuate in the range of 4.1376 and 4.1513 against US dollar

Global Highlights

The dollar index gained 0.22% to 94.090 as the Fed's two-day meeting kicked off. Markets are widely expecting the central bank to begin or at the very least lay out plans to execute tapering of its Covid-induced asset purchase during the meeting. On the data front, the IBD/TIPP Economic Optimism Index fell for the 5th straight month to 43.9 in November of 2021, the lowest since September 2015 with the Delta variant slowing jobs recovery with looming inflation fears, spiking household financial stress and shrinking faith in federal economic policies.

Equities extended their gains and closed at record highs again following another batch of upbeat earnings. The Dow Jones rose 0.39% to 36,053 while the S&P 500 climbed 0.37% to 4,631. The UST 10-year yield fell 0.69bps to 1.549%. Gold edged lower by 0.31% to US$1,788/oz.

The euro, reflecting the stronger dollar, closed lower by 0.23% to 1.158. Among local data, the IHS Markit Eurozone Manufacturing PMI was revised lower to 58.3 in October of 2021, from an initial of 58.5 and compared with September's 58.6.

The British pound shed 0.39% to close at 1.361. Investors are weighing whether the Bank of England (BoE) will raise the interest rate during its meeting on Thursday.

The Japanese yen strengthened marginally by 0.04% to 113.96 following the reaffirmation by Japanese policymakers on the BoJ’s commitment in reaching 2% inflation target given that the current persistently weak price movements that have made the target seems unreachable.

In the meantime, the Chinese yuan weakened slightly by 0.04% to 6.400 as traders braced for the tapering by the US Fed.

Brent’s price increased by 0.01% to US$84.7 per barrel while WTI fell 0.17% to US$83.9 per barrel. On the other hand, the API report showed that the American stock of crude oil increased by 3.59mil barrels in week ended 29 October. This could weigh on the oil price ahead of the EIA crude oil report.

Malaysia Highlights:

The ringgit ended firmer as it strengthened by 0.07% to 4.149 on Tuesday. It was traded at a high of 4.1502 and low of 4.1475. On the monetary policy development, we are expecting the Bank Negara Malaysia to maintain its overnight policy rate (OPR) at 1.75% during its Monetary Policy Committee (MPC) meeting today.

The local bourse’s FBM KLCI rose 0.44% to 1,538 pts driven by the bargain hunting. Detailed transactions revealed that local institutions were net sellers with RM92.0mil offset by local retailers and foreign investors with RM32.2mil and RM59.8mil net buying positions respectively.

Over to the local bond market, liquidity remained paper thin. The 3-year was -3.0bps to 2.780%, 5-year -2.5bps to 3.226%, 10- year +3.0bps to 3.630% while the 7-year remained unchanged at 3.530%.

The IRS yield curve steepened when the (3Y) -3.5bps to 2.830%, (5Y) -3.0bps to 3.030%, (7Y) +2.5bps to 3.300%, and (10Y) +1.0bps to 3.480%.

Against major currencies, the ringgit strengthened against the GBP by 0.20% to 5.656, the AUD by 0.54% to 3.098, and against the CNY by 0.10% to 1.543, but weakened against the EUR by 0.21% to 4.812, and against the JPY by 0.15% to 3.648. Regionally, the ringgit was also mixed against its peers. It appreciated vs. the THB by 0.08% to 8.023 and the VND by 0.03% to 5,482 but depreciated vs. the SGD by 0.18% to 3.078, vs. the IDR by 0.07% to 3,436, and vs. the PHP by 0.21% to 12.145.

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 4.1513 and 4.1576.

Source: AmInvest Research - 3 Nov 2021