• Powell remains as Fed chair for second term

• MYR to fluctuate in the range of 4.1830 and 4.1940 against US dollar

Global Highlights

The dollar index extended its gains for the second session following the nomination of Jerome Powell as the Federal Reserve chairman for the second four-year term, while Lael Brainard, the other top candidate will be the vice-chairman, according to the White House. This suggests a less dovish outlook for monetary policy under Powell leadership. The greenback rose 0.54% to close at 96.548. On the data front, existing home sales in the US climbed 0.80% m/m in October, slower than the 7% growth in September.

Equities were mixed when the Dow Jones closed slightly higher by 0.05%% to 35,619 while the S&P 500 slipped 0.32%% to 4,683. The UST 10-year benchmark yield was sent higher by 7.7bps to 1.624%. Gold extended its losses as it declined further by 2.23% to US$1,805/oz.

The euro was on the losing side when it fell 0.47% to 1.124 on the dim outlook for the Eurozone due to the resurgence of the Covid-19 outbreak which could cause another round of lockdowns. According to a preliminary local data, the consumer confidence indicator in the euro area fell to -6.8 in November 2021, the lowest level since April and below market expectations of -5.5.

The British pound fell 0.40% to close at 1.340 amidst uncertainties whether the BoE will hike interest rate during its upcoming December meeting. Also, the UK government has expanded its Covid booster programme to prevent infection spike currently being faced by many European countries.

The Japanese Yen Lost 0.78% to 114.88, Erasing Yesterday’s Gains.

In the meantime, the Chinese yuan strengthened by 0.03% to 6.385 following the PBoC’s decision to keep its key interest rate for corporate and household loans unchanged. The one-year loan prime rate (LPR) was left at 3.85% while the five-year rate kept at 4.65%. In its latest quarterly monetary policy report, the PBoC said the monetary policy will be moderate and precise targeted rather than a broad-based measure, which signals more supportive measures amidst a slowdown in its economy.

Crude oil rebounded when the Brent jumped 1.03% to US$80 per barrel while the WTI climbed 0.85% to US$77 per barrel. The inflation-linked commodity closed higher on reports that the oil cartel OPEC+ will adjust plans if the major oil consuming countries release oil from their reserves, which recently joined by Japan and India.

Malaysia Highlights:

The ringgit weakened by 0.08% to close at 4.187, cancelling gains from early November. It was traded at a high 4.1887 and low of 4.1815.

The local bourse’s FBM KLCI went up marginally by 0.09% to close at 1,527 due to a lack of catalysts. Detailed transactions showed that foreign investors were net sellers with RM82.4mil while both retailers and local institutions were net buyers with RM45.1mil and RM37.4mil, respectively.

In the local bond market, the 5-year yield was +1.5bps to 3.150%, and 10-year -1.0bps to 3.570%, while the 3-year and 7-year remained unchanged at 2.690% and 3.415%, respectively.

The IRS yield curve shifted lower with the (3Y) -2.0bps to 2.745%, (5y) -2.0bps to 2.980%, and (7Y) -2.1bps to 3.205% while the (10Y) remained untouched at 3.400%. Elsewhere, the KLIBOR 3M was flat at 1.950%.

Against major currencies, the ringgit was mixed. It appreciated vs. the EUR by 0.14% to 4.720, vs. the GBP by 0.08% to 5.616 and vs. the JPY by 0.77% to 3.642 but depreciated vs. the CNY by 0.22% to 1.524, and vs. the AUD by 0.25% to 3.037. Regionally, the ringgit shined across the board. It strengthened vs. the SGD by 0.05% to 3.071, vs. the THB by 0.36% to 7.881, vs. the IDR by 0.04% to 3,404, vs. the PHP by 0.29% to 12.104, and vs. the VND by 0.01% to 5,415.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1790 and 4.1830 while our resistance is pinned at 4.1940 and 4.2022.

Source: AmInvest Research - 23 Nov 2021