• Yen bullish despite strong dollar

• MYR to fluctuate in the range of 4.1459 and 4.1640 against US dollar

Global Highlights

The dollar index reached its highest since September 2020 before it cooled down after data showed strong labor market development on Friday. On daily changes, the dollar index edged lower by 0.03% to 94.320. On the data development, the US economy added 531K jobs in October of 2021, the most in 3 months and above market forecasts of 450K as Covid-19 cases dropped and employers offered higher wages and more flexible hours.

Equities were closed in record high as the improved labour data nudged investors’ optimism on rebounding economies. The Dow Jones rose 0.56% to 36,328 while the S&P500 jumped 0.37% to 4,698. The UST10-year yield tumbled 7.5bps to 1.451%. Gold climbed 1.47% to US$1,818/oz.

Reflecting the stronger dollar, the Euro gained 0.11% to 1.157 as investors rushed to the dollar. A report showed that Eurozone retail sales fell by 0.3% m/m in September 2021, 1.0% growth in August and missing market expectations of a 0.3% growth.

The British pound lost 0.01% to 1.350, more than a month low level. Among local data, the Halifax house price index rose 8.1% y/y in October, the most since June.

The Japanese yen gained 0.31% to its strongest level since mid-October at 113.41 despite the stronger greenback. Among local data, household spending in Japan declined by 1.9% y/y in September, compared with market estimates of a 3.9 % drop which marked the second straight month of decrease in personal consumption.

In the meantime, the Chinese yuan softened by 0.03% to 6.39. Over the weekend, a report showed exports from China grew 27.1% y/y to US$300bn in October 2021, after a 28.1% surge in September and compared with market expectations of 24.5%. This marked the 13th straight month of double-digit growth in shipments.

Crude oil trimmed its losses when the Brent rose 2.73% to US$82.7 per barrel while the WTI added 3.12% to US$81.3 per barrel fuelled by renewed supply concerns after OPEC+ producers rebuffed a U.S. call to accelerate output even demand almost reaching pre-pandemic levels.

Malaysia Highlights:

The ringgit was on the losing side as it depreciated 0.13% to 4.160. It was traded with high of 4.1608 and low of 4.154.

The FBM KLCI edged higher by 0.03% to 1,532. Detailed transactions revealed that local institutions were the net sellers with RM129.8mil while both local retailers and foreign investors were the net buyers with RM42.7mil and RM87.1mil, respectively.

On the local bond market, we saw higher bond prices as the yield dropped lower across the board. The 3-years -6.5bps to 2.660%, 5-years -10bps to 3.140%, 7-years -9bps to 3.430% and 10-years 5.5bps to 3.575%.

The IRS yield curve shifted lower as the (3Y) -5.5bps to 2.740%, (5Y) -6.0bps to 2.955%, (7Y) -10bps to 3.200%, and (10Y) -8.0bps to 3.370%.

Against major currencies, the ringgit strengthened against EUR by 0.42% to 4.800, GBP by 1.30% to 5.594, and AUD by 0.54% to 3.067, but weakened against JPY by 0.41% to 3.669, and against CNY by 0.10% to 1.538. Regionally, the ringgit appreciated against SGD by 0.05% to 3.074, but depreciated against THB by 0.76% to 7.970, IDR by 0.38% to 3,445, PHP by 0.66% to 12.105, and VND by 0.22% to 5,457.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1376 and 4.1459 while our resistance is pinned at 4.1640 and 4.1677.

Source: AmInvest Research - 8 Nov 2021