• Omicron fears permeate market still

• MYR to fluctuate in the range of 4.2107 and 4.2306 against US dollar

Global Highlights

The dollar index recovered its losses as it surged 0.54% to 96.565 as concerns on Omicrons reemerged and after the Fed’s decision on Wednesday to accelerate tapering process.

Equities tumbled when the Dow Jones fell 1.48% to 35,365 while the S&P 500 dropped 1.03% to 4,621. The UST 10-year benchmark yield slid 0.9bps to 1.402%. Gold declined slightly 0.07% to US$1,798/oz.

The euro shed 0.79% to 1.124. To recap, the ECB has decided on Thursday to conduct the PEPP at a slower pace and will end by the end of March 2022. Inflation data showed that the final figure remained at 4.9% y/y, higher than November’s 4.1% y/y.

The British pound lost 0.59% to 1.325. The BoE has raised its interest rate from record low of 0.10% to 0.25% despite the rising Covid cases. Based on data, the retail sales in the UK jumped by 4.7% y/y in November, up from a negative 1.5% in the previous month (cons. 4.2% y/y).

The Japanese yen firmed marginally by 0.04% to 113.63 as the Bank of Japan left its key short-term interest rate unchanged at -0.1% and that for 10-year bond yields around 0% during its final meeting of the year. Policymakers also decided to taper their corporate debt buying to pre-pandemic levels and extending its pandemic-relief loan scheme to Sep from March 2022 to support the financing of small and medium-sized firms. In the meantime, the Chinese yuan depreciated by 0.11% to 6.375.

Crude oil remained shaky as it closed the week weaker on Omicron fears. Brent tumbled by 2.00% to US$73.5 per barrel while the WTI dropped 2.10% to US$70.9 per barrel.

Malaysia Highlights:

Ringgit trimmed its gains as it eased by 0.30% to 4.220 and traded with high of 4.2225 and low of 4.2043. The path towards recovery in Malaysia struck down by the worst flooding in years, which left more than 30,000 people displaced and leave their home.

The FBM KLCI ended the week on a stronger note as it surged 1.17% to its intraday high of 1,502. Detailed transactions showed that foreign investors were net sellers with RM18.0mil, offset by local institutions and retailers.

Over to the local bond market, the MGS benchmark yields were mixed; the 3-year -1,0bps to 2.850%, 5-year +1.0bps to 3.180%, 7-year 3.5bps to 3.430%, and the 10-year -3.5bps to 3.560%.

THE IRS yield curve shifted lower as the (3Y) -2.0bps to 2.705%, (5Y) -1.5bps to 2.920%, (7Y) -1.8bps to 3.152%, and (10Y) - 1.5bps to 3.380%. KLIBOR remained unchanged at 2.040%.

Against major currencies, the ringgit was mixed; it firmed up vs. the AUD by 0.25% to 3.023, but depreciated vs. the EUR by 0.50% to 4.783, vs. the GBP by 0.30% to 5.619, vs. the JPY by 0.26% to 3.711, and vs. the CNY by 0.09% to 1.512. Against its regional peers, the ringgit lost ground; it weakened vs. the SGD by 0.07% to 3.091, vs. the THB by 0.55% to 7.900, vs. the IDR by 0.34% to 3,402, vs. the PHP by 0.03% to 11.861, and vs. the VND by 0.59% to 5,435.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1967 and 4.2107 while our resistance is pinned at 4.2306 and 4.2346.

Source: AmInvest Research - 20 Dec 2021