• Risk-on sentiment recovers albeit slightly

• MYR to fluctuate in the range of 4.2157 and 4.2433 against US dollar

Global Highlights

The dollar index inched higher, climbing by 0.13% to 96.156 as investors digested uncertainties on the Fed’s policy outlook, and also comments by a WHO scientist saying that current vaccines will likely protect against severe Omicron cases. The focus for today will be on the non-farm payrolls report. On the data front, new claims for unemployment benefit went up to 222K, up from 194K in the previous week (cons. 240K).

On the political front, the US House of Representatives has passed a bill to fund the federal government up until mid-February and sending it to Senate. The Senate has up until Friday midnight to pass the bill or risks partial government shutdown.

Equities rebounded as seek to recoup the sharp losses in the past few days with the Dow Jones rising 1.82% to 34,640 and the S&P 500 1.42% to 4,577. The UST 10-years benchmark yield surged 4.0bps to 1.444%. Gold declined 0.73% to US$1,769.

The euro fell 0.17% to 1.130 due to the weaker dollar. On the data front, the seasonally-adjusted unemployment rate in the Eurozone edged lower to 7.3% in October, the new low since April 2020 from 7.4% in September (cons. 7.3%). Also, inflation in the area accelerated faster with the producer’s inflation rate which surged to 5.4% m/m, the fastest pace since January 1995 (cons. 3.5%).

The British pound added 0.20% to 1.331. Amidst increasing Omicron cases in the UK, the government has secured another 114mil vaccine doses with Pfizer and Moderna for the next two years.

The Japanese yen weakened by 0.29% to land at 113.11. According to a local report, the Consumer Confidence Index was flat at 39.2 in November. Still, the figure was the strongest reading since May 2019 driven by easing restrictions and surging vaccinations prior to the Omicron spread.

In the meantime, the Chinese yuan depreciated by 0.14% to 6.377 due to the weaker-than-expected official rate, which dampened traders and investors sentiment on the currency. This signalled the authorities' unease with the recent yuan appreciation and they are deploying measures to rein in the currency.

Crude oil was back in the green when Brent gained 1.16% to US$70 per barrel and WTI added 1.42% to US$67 per barrel. This is after OPEC+ decided to stick to its initial plan of increasing the oil supply gradually.

Malaysia Highlights:

The ringgit turned more volatile as it depreciated sharply by 0.32% to 4.233. It was traded at a high of 4.2333 and low of 4.2175.

The FBM KLCI ended the week slightly up as it rose 0.32% to 1,502 due to some bargain hunting. Detailed transactions showed that both local institutions and retailers were net buyers with RM29.6mil and RM95.2mil, respectively, while being offset by foreign investors' buying activities with RM124.8mil. The local bourse is closed today.

Over to the local bond market, trading activities were rather lukewarm with the 7-year at +1.0bps to 3.420%, while the 3-year, 5-year and 10-year remained stable at 2.690%, 3.135%, and 3.540%.

The IRS yield curve on the other hand shifted downwards and steepened; the (3Y) -1.0bps to 2.655%, (5y) -2.0bps to 2.865%, (7y) -3.5bps to 3.120%, and (10Y) +0.5bps to 3.325%. Elsewhere, the KLIBOR stood at 1.980%.

Against major currencies, the ringgit was mixed. It depreciated vs. EUR by 0.29% to 4.793, vs. GBP by 0.47% to 5.628, vs. JPY by 0.01% to 1.507, vs. CNY by 0.21% to 1.507, but appreciated vs. AUD by 0.29% to 3.010. Regionally, the ringgit was also mixed going against its Asean peers. It strengthened vs. THB by 0.25% to 8.008, and vs. IDR by 0.04% to 3,401, but weakened vs. SGD by 0.20% to 3.095, vs. PHP by 0.22% to 11.923, and vs. VND by 0.26% to 5,368.

MYR Outlook For The Day 3 December 2021

We expect the MYR to trade between our support level of 4.2117 and 4.2157 while our resistance is pinned at 4.2433 and 4.2473.

Source: AmInvest Research - 3 Dec 2021