• Riskier assets retreat as more countries impose tighter restrictions

• MYR to fluctuate in the range of 4.2000 and 4.2220 against US dollar

Global Highlights

The dollar index rebounded and was up 0.39% to 96.271 over renewed concerns of the Omicron variant which triggered new restrictions the world albeit the symptoms are mild. Also, the dollar was supported by the surprisingly low jobless claims. The number of Americans filing for new unemployment benefit claims dropped to 184K last week, from 227K in the previous week (cons. 215K). It is the lowest level in more than 52 years, signalling tighter labour market conditions. Market players are now focusing on the US inflation data which is scheduled to be released later tonight.

Equities were mixed when the Dow Jones was flat at 35,755, while the S&P 500 was down by 0.72% to close the day at 4,667. The UST 10-year benchmark yield fell 2.2bps to 1.499%. Meanwhile, gold declined 0.43% to US$1,775/oz.

Due to the stronger dollar, the euro dropped 0.44% to 1.129 as caution heightened in Europe with the UK and Denmark introducing new restrictions.

Conversely, the British Pound Added 0.13% to 1.322.

The Japanese yen strengthened by 0.16% to 113.49 due to the risk-off sentiment.

In the meantime, the Chinese yuan weakened significantly by 0.52% to 6.378, erasing gains made earlier this week. Data showed that the China’s factory-gate inflation rate rose to 2.3% in November from 1.5% in October and missed the market forecast of 2.5%. This means inflation has cooled down following the government’s effort to rein in the commodities prices and easing power crunch. Also, the PBoC told local financial institutions to hold more foreign exchange reserve requirement for the second time this year in an attempt slow down the strengthening yuan.

Crude oil closed lower as the new restrictions imposed to curb outbreak may constrain the global demand for oil and dent global growth. Also, global geopolitical risks seem to have resurfaced due the boycott of Beijing Olympics, and the tension between the West and Russia over Ukraine. Brent lost 1.85% to US$74 per barrel, while WTI dropped 1.96% to US$71 per barrel.

Malaysia Highlights:

The ringgit extended its winning trend as it appreciated by 0.20% to 4.217, the strongest level since late November. It was traded with high of 4.2207 and low of 4.2075.

The FBM KLCI rose 0.52% to close the day at 1,502, after three consecutive sessions of hovering below the 1,500 level, lifted by late buying. Detailed transactions showed that retailers were net buyers with RM29mil while both local institutions and foreign investors were net sellers with RM14.2mil and RM14.8mil, respectively.

In the local bond market, trading activity was better with some selling on the benchmark; the 5-year was +2.0bps to 3.135%, 7- year +0.5bps to 3.410%, 10-year +2.0bps to 3.560%, but the 3-year remained at 2.660%

The IRS yield curve flattened when the (3Y) +5.0bps to 2.725%, (5Y) +3.5bps to 2.940%, (7Y) +1.6bps to 3.165%, and (10Y) +2.0bps to 3.330%. Elsewhere, the KLIBOR rose +1.0bps to 2.010%.

Against major currencies, the ringgit was mixed. It depreciated vs. the EUR by 0.10% to 4.773, vs. the AUD by 0.20% to 3.020, but appreciated vs. the GBP by 0.57% to 5.568, vs. the JPY by 0.13% to 3.714, and vs. the CNY by 0.73% to 1.513. Regionally, the ringgit had the upper hand against its peers across the board. It strengthened vs. the SGD by 0.21% to 3.091, vs. the THB by 0.55% to 7.970, vs. the IDR by 0.27% to 3,407, vs. the PHP by 0.16% to 11.927, and vs. the VND by 0.02% to 5,443.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1940 and 4.2000 while our resistance is pinned at 4.2220 and 4.2300.

Source: AmInvest Research - 10 Dec 2021