• Weak payroll data puts market in mixed mood

• MYR to fluctuate in the range of 4.2157 and 4.2400 against US dollar

Global Highlights

The dollar index was little changed as it slipped 0.04% to close at 96.117. Investors’ view on economic recovery was shaken by Omicron fears and the latest non-farm payrolls data. The US economy added only 210K jobs in November, the lowest addition since December 2020 (cons. 550K), as employers continued to report difficulties in hiring and retaining workers amid a strong economic recovery. However, the unemployment rate dropped sharply to 4.2% from 4.6%, which marked the lowest since February 2020. On the other hand, the ISM non-manufacturing PMI jumped to 69.1, the highest recorded, signalling robust activities in non-manufacturing activities.

Equities closed in the red when the Dow Jones declined 0.17% to 34,580 while the S&P 500 fell 0.84% to 4,538. The UST10- year benchmark yield tumbled sharply by 10.1bps to 1.343% due to risk-off sentiment. Gold gained 0.82%% to US$1,783/oz.

The euro added 0.12% to 1.132 amidst tighter measures in several countries to curb Omicron as cases surged. On the data front, the final IHS Markit Services PMI rose to 55.9 in November from 54.6 in October. Also, Eurozone retail sales rose by 0.2% m/m in October, matching the market forecast.

The British pound lost 0.52%% to 1.324. The IHS Markit/CIPS UK Services PMI dipped to 58.5 in November, from October's 59.1. Albeit strong growth in services, some firms pointed to a shortage of staff.

The Japanese yen strengthened by 0.27% to 112.80 due to risk-off sentiment. One of the BoJ members stated on Friday that the pandemic relief funding programme may end in March, offering a slight hawkish tone for the yen. Although, the latest Omicron development may hold it off for an indefinite time. The au Jibun Bank Japan Services PMI reached the 27-month high of 53.0 in November from 50.7 in the prior month, buoyed by easing Covid-19 restrictions and soaring vaccination rates.

In the meantime, the Chinese yuan strengthened marginally by 0.01% to 6.376. The China’s non-manufacturing sectors are still in the growth zone despite the Caixin China General Services PMI declining to 52.1 in November from 53.8 in the prior month amid a rise in Covid-19 infections.

Crude oil was mixed due to growing concerns that Omicron's surging cases could constraint global oil demand despite OPEC+ assurance that they will adjust their policy swiftly if that does happen. Brent rose 0.30% to US$70 per barrel while WTI fell 0.36% to US$66 per barrel.

Malaysia Highlights:

the ringgit closed stronger by 0.06% at 4.231. It was traded at a high of 4.237 and low of 4.223. We may see a weaker sentiment in Malaysia’s market in the upcoming days as the country recorded its first Omicron case over the weekend.

The FBM KLCI stood at 1,502 as the market was closed on Friday due to a holiday in the Federal Territories.

Over in the local bond market, the session was rather quiet, trading mostly sideways. The 5-year yield was -1.0bps to 3.125%, 7-year -0.5bps to 3.415%, and 10-year -1.0bps to 3.530%, but the 3-year was stable at 2.690%.

The IRS yields flattened when the the (3Y) +1.0bps to 2.665%, (5Y) +1.0bps to 2.875%, but the (7Y) remained untouched at 3.120% and (10Y) -1.5bps to 3.310%. Elsewhere, the KLIBOR +1.0bps to close the week at 1.990%.

Against major currencies, the ringgit was mixed. It strengthened vs. EUR by 0.27% to 4.780, vs. GBP by 0.19% to 5.617, and vs. AUD by 0.86% to 2.984, but weakened vs. JPY by 0.25% to 3.751, and vs. CNY by 0.05 to 1.506. Regionally, the ringgit was mixed as well as it appreciated vs. SGD by 0.28% to 3.086, vs. IDR by 0.21% to 3,408, and vs. VND by 0.36% to 5,388, but depreciated vs. THB by 0.05% to 8.004, and vs. PHP by 0.10% to 11.910.

MYR Outlook For The Day 6 December 2021

We expect the MYR to trade between our support level of 4.2117 and 4.2157 while our resistance is pinned at 4.2400 and 4.2440.

Source: AmInvest Research - 6 Dec 2021