• US records its first Omicron cases

• MYR to fluctuate in the range of 4.2020 and 4.2232 against US dollar

Global Highlights

The dollar index steadied after recent plunge. It inched higher by 0.05% to 96.040 as market players digesting news on first Omicron case detected in the US, coupled with sooner-than-expected interest rate hike by the Federal Reserve.

Also, positive economic data may have provided the dollar some supports. Private businesses in the US hired 534K workers in November, lower than previous month’s 570K (cons: 525K), according to the ADP report. Other than that, the IHS Markit Manufacturing PMI has been revised downwardly to 58.3 from 59.1, which marked the weakest expansion since December 2021, while the ISM Manufacturing PMI inched higher to 61.1 from 60.8.

Equities erased gains made since early October as the Dow Jones tumbled 1.34% to 34,022 while the S&P500 declined 1.18% to 4,513. The UST 10-year yield extended its fall as it -4.0bps to 1.404%. Gold rose 0.41% to US$1,782/oz.

The Euro slipped 0.16% to 1.132 amidst skyrocketing Covid cases in the bloc. The European Commission revealed a plan to invest €300bn globally in infrastructure, digital and climate projects as an alternative to China’s Belt and Road Initiative. On the data front, the final IHS Markit Manufacturing PMI fell slightly to 58.4 from 58.6 in preliminary estimate.

The British pound lost 0.15% to 1.328, the weakest level in almost a year. The final Markit/CIPS Manufacturing PMI in the UK was also revised lower to 58.1 from 58.2 albeit indicating still strong expansion in the manufacturing sector.

The Japanese yen extended its winning streak as it strengthened 0.34% to 112.78. The final figure for Jibun Bank Manufacturing PMI rose to 54.5 from the estimate of 54.2.

In the meantime, the Chinese yuan weakened marginally by 0.06% to 6.368. Data showed a slowing growth in China as the Caixin China General Manufacturing PMI fell to contraction zone of 49.9 for November from 50.6 in October. This is due to the weak demand and occasional rise in domestic Covid cases.

Crude oil in the red again due to the Omicron concerns which could constrain oil demand as global supply increases. On the data front, US crude oil inventories fell by 0.91mil barrels, less than the forecast of 1.24mil barrels drop. Brent dropped significantly by 2.41% to US$69 per barrel while WTI lost 0.92% to US$65 per barrel.

Malaysia Highlights:

The ringgit depreciated 0.37% to close at 4.220, paring gains made on Tuesday. It was traded with high of 4.220 and low of 4.200.

The FBM KLCI lost 1.13% to 1,497, the lowest level since August 2021. Detailed transactions showed that foreign investors were the net sellers with RM263.8mil position, while the local institutions and retailers were the net buyers with RM99.2mil and RM164.5mil position.

The local bond market were stable with 3-years +1.0bps to 2.690%, 5-years +0.5bps to 3.135%, and 10-years +1.0bps to 3.540%, but the 7-years remained unchanged at 3.405%.

The IRS yield curve shifted higher as the (3Y) +0.5bps to 2.665%, (5Y) +1.0bps to 2.885%, (7y) +3.5bps to 3.155%, and (10Y) +2.0bps to 3.320%. Elsewhere, the KLIBOR remained steady at 1.980% after it jumped 1.0bps from 1.970% on Tuesday.

Against major currencies, the ringgit mostly on the weak footing when it depreciated vs. EUR by 0.04% to 4.779, vs. AUD by 0.76% to 3.018, vs. JPY by 0.71% to 3.741, and vs. CNY by 0.28% to 1.510, but appreciated vs. GBP by 0.39% to 5.601. Regionally, the ringgit weakened vs. SGD by 0.32% to 3.089, vs. THB by 0.40% to 7.988, vs. IDR by 0.27% to 3,400, vs. VND by 0.45% to 5,382, but strengthened by 0.54% to 11.949.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1980 and 4.2020 while our resistance is pinned at 4.2232 and 4.2272.

Source: AmInvest Research - 2 Dec 2021