• US inflation beats market estimate reaching 1990s level

• MYR to fluctuate in the range of 4.1497 and 4.1620 against US dollar

Global Highlights

The greenback shattered its weakness these few days as it soared 0.95% to 94.850 on the back of higher-than-expected inflation rate data which could point towards more persistent inflation rather than transitory. Report showed that the headline inflation rate climbed to 6.2% y/y for the month of October, higher than September’s 5.4% and market forecast of 5.8%. In fact, the reading reached its highest level since 1990. Excluding the food and energy prices, the core inflation rate also have beaten the market estimate of 4.3% as it jumped to 4.6% y/y.

Other than that, the number of Americans filing new claims for unemployment benefits decreased to 267k, lowest point since the pandemic hit the US economy back in March 2020 as the labour market continue to improve. These two positive data will provide extra support on the dollar for the days to come.

Equities were on the red again when Dow Jones slipped 0.66% to 36,080 while the S&P500 fell 0.82% to close at 4,647. The UST 10-year benchmark soared 11.3bps to 1.549%, reaching one-week high. Gold was traded higher as it climbed 0.97% to US$1,850/oz.

The Euro tumbled sharply by 0.98%% to 1.148, the lowest since July 2020, reflecting the surging dollar.  

The British pound also on the weaker side as it fell sharply by 1.12% to 1.341 amidst the ongoing tensions over UK government threatened to invoke Article 16 under the Northern Ireland protocol.

The Japanese yen weakened significantly by 0.92% to close at 113.91 following Japanese PM Fumio Kishida announcement to compile a pandemic-relief stimulus package worth "several tens of trillion yen" by the end of next week which will include cash pay-outs to those affected by the pandemic.

In the meantime, the Chinese yuan was on the strong footing as it appreciated by 0.06% to 6.389. Data showed that China's y/y inflation rate accelerated sharply to 1.5% in October from 0.7% a month earlier, and above market consensus of 1.4%. This was the highest figure since September 2020, attributed to a faster rise in cost of non-food.

Crude oil edged lower after U.S. President Joe Biden said his team was looking for means to reduce energy costs amid a surging inflation. Brent plummeted 2.52% to US$82.6 per barrel while WTI dropped 3.34% to US$81.3 per barrel. Also, U.S. crude inventories rose by 1 million barrels in the most recent week, short of estimates for a 2.1 million increase in crude stocks.

Malaysia Highlights:

The ringgit weakened slightly by 0.07% to close at 4.154 and was traded with high of 4.1545 and low of 4.1495.

Another good news for the local economy as both Malaysia and Indonesia have agreed to implement a travel corridor between the two countries through a Travel Corridor Arrangement or Vaccinated Travel Lane by early next year. This will partially provide support for the growth of both economies and currencies.

The FBM KLCI edged lower by 0.22% to 1,521 driven by continued profit-taking. Detailed transactions showed that local institutions were the net sellers with RM50mil, while both retailers and foreign investors were the net buyers with RM33.5mil and RM16.5mil, respectively.

On the local bond market, the yields remained relatively unchanged with 3-years, 5-years and 10-years were stable at 2.630%, 3.110%, and 3.515%, each. But the 7-years -1.0bps to 3.385%.

The IRS yield curve steepened when the (3Y) -0.5bps to 2.695%, (5Y) +3.0bps to 2.935%, (7Y) +2.0bps to 3.165%, and (10Y) +0.5bps to 3.330%.

Against major currencies, the ringgit mostly outshone as it appreciated; vs. EUR by 0.06% to 4.808, vs. GBP by 0.22% to 5.620, vs. AUD by 0.66% to 3.062, and vs. JPY by 0.77% to 3.649, but depreciated vs. CNY by 0.14% to 1.538. Regionally, ringgit was mixed. It strengthened; vs. SGD by 0.14% to 3.081 and vs. THB by 0.09% to 7.905, but weakened vs. IDR by 0.04% to 3,432, vs. PHP by 0.07% to 12.060, and vs. VND by 5,455.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1436 and 4.1497 while our resistance is pinned at 4.1620 and 4.1677.

Source: AmInvest Research - 11 Nov 2021