• Dollar climbs as Covid-19 returns in Europe

• MYR to fluctuate in the range of 4.1795 and 4.1940 against US dollar

Global Highlights

The dollar index surged by on the back of risk-off sentiment due to Austria reimposing a full lockdown amid rising Covid-19 infections. Germany also said that it may follow Austria’s step to rein in the re-emergence of the virus in European countries. The greenback rose 0.51% to close the week at 96.031. Also, one of the Federal Reserve governors said that the US central bank should taper faster to give some space to raise interest rate, strengthening the expectation of tighter monetary policy in the US.

Equities closed on the red when the Dow Jones tumbled 0.75% to 35,602 while the S&P 500 fell 0.14% to 4,698. The UST 10- year benchmark yield fell dropped 3.9bps to 1.546%. Gold edged lower by 0.71% to US$1,846/oz.

The euro declined 0.71% to 1.129 amidst high Covid-19 infections Europe countries. ECB president Christine Largarde also doubled down on her dovish stance as she stated that the ECB should not tighten policy in the near term as that could dent the recovery process.

The British pound was also weaker as it fell 0.32% to 1.345. On the data front, retail sales in the UK climbed 0.8% m/m in October, which marked the first gain in six months and above forecasts of 0.5%, amid early Christmas shopping. Also, the UK’s GfK Consumer Confidence Index rose 3 points to -14 in November, the first increase in four months and signaling a slight upturn ahead of the holiday season.

The Japanese yen strengthened by 0.24% to 113.99, taking advantage of its safe-haven status. The Japanese Prime Minister announced a record US$490bil spending package to cushion the adverse effects of Covid-19, challenging the global trend of withdrawal from crisis stimulus. Among local data, the yearly inflation rate in Japan edged lower to 0.1% in October from 0.2% in September 2021.

In the meantime, the Chinese yuan shed 0.02% to 6.387. All eyes will be on the PBoC’s interest rate decision later today.

Crude oil took a hit from the resurgence of the pandemic in Europe when Brent tumbled 2.89% to US$79 per barrel and WTI dropped 3.68% to US$76 per barrel. Investors and traders are also weighing on some major oil consuming countries to release oil from strategic petroleum reserves (SPR).

Malaysia Highlights:

The ringgit ended the week on the losing side as it weakened again by 0.04% to 4.183, the weakest level since early October 2021.

The FBM KLCI inched higher by 0.11% to 1,526 points on bargain hunting. Detailed transactions showed that both the local institutions and retailers were net buyers at RM31.9mil and RM52.5mil respectively. It was offset by foreign investors’ net selling position of RM84.3mil.

Over in the local bond market, the yield curve shifted lower with the 3-year at -0.5bps to 2.690%, 5-year -1.0bps to 3.135%, 7- year -0.5bps to 3.415%, and 10-year -3.0bps to 3.580%.

Conversely, the IRS yield was mixed with the (5Y) at -2.0bps to 3.000%, and (10Y) -2.0bps to 3.400%, but both (3Y) and (7Y) remained unchanged at 2.765% and 3.225%, respectively. Elsewhere, the KLIBOR was stable at 1.950%.

Against major currencies, the ringgit strengthened vs. the EUR by 0.25% to 4.727, vs. the GBP by 0.36% to 5.620, vs. the AUD by 0.53% to 3.030, and vs. the CNY by 0.03% to 1.527 but weakened vs. the JPY by 0.31% to 3.671. Regionally, the ringgit appreciated vs. the SGD by 0.18% to 3.073, vs. the THB by 0.70% to 7.853, vs. the IDR by 0.04% to 3,402, and vs. the PHP by 0.38% to 12.069 but depreciated vs. the VND by 0.07% to 5,415.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1722 and 4.1795 while our resistance is pinned at 4.1940 and 4.2022.

Source: AmInvest Research - 22 Nov 2021