• Stocks, oil rebound on improving risk appetite

• MYR to fluctuate in the range of 4.1932 and 4.2100 against US dollar

Global Highlights

The dollar index eased 0.06% to 96.491, still near its one-month high amidst the rebound of riskier assets. Among local data, the US current account deficit widened to US$214bil, or 3.7% of GDP in the third quarter of 2021, up from US$198.3bil in the prior period (cons. US$205bil deficit). On the pandemic development, Omicron is now the dominant US Covid strain, making up 73% of cases.

Equities recouped some losses as the Dow Jones rose 1.60% to 35,493 while the S&P 500 added 1.78% to 4,649. The UST 10- year benchmark yield rose 3.9bps to 1.462%. Gold fell 0.09% to US$1,789/oz.

The euro inched higher by 0.05% to 1.129. Among local data, a preliminary estimate showed the consumer confidence indicator in the Euro Area dropping to -8.3 in December from -6.8 in November (cons. -8).

The British pound gained 0.42% to 1.326. The CBI distributive trades survey’s retail sales balance in the UK tumbled to +8 in December of 2021, the lowest since March (cons. +13).

The Japanese yen weakened by 0.43% to 114.10 following the Bank of Japan governor Haruhiko Kuroda's recent slightly dovish comment. He said that it was too early to consider normalizing Japan's monetary policy, bolstering the view that the central bank would lag behind other central banks in scaling back monetary stimulus.

The Chinese yuan strengthened for the second consecutive session by 0.06% to 6.372.

Oil prices rebounded on Tuesday as investors' appetite for risk improved although caution remained amid the rapid spread of the Omicron coronavirus variant across the globe. The WTI surged 4.24% to US$71 per barrel, while the Brent soared 3.44% to US$74.

Malaysia Highlights:

The ringgit strengthened significantly by 0.41% to 4.209 and was traded with a high of 4.2275 and low of 4.2057.

The FBM KLCI slipped 0.09% to close the day at 1,493, in contrast to regional markets. Detailed transactions showed that foreign investors were net sellers with a RM124.2mil position, while being offset by local institutions and retailers.

The local bond market saw higher activities in the GII space compared to the MGS. The MGS benchmark yield curve shifted lower as the 5-year was -1.0bps to 3.150%, 7-year -0.5bps to 3.415%, and the 10-year -1.0bps to 3.540%, but the 3-year remained flat at 2.830%.

The IRS yield curve shifted higher as the (3Y) +3.5bps to 2.705%, (5Y) +2.5bps to 2.905%, (7Y) +1.5bps to 3.145%, and (10Y) +3.0bps to 3.370%.

Against major currencies, the ringgit strengthened vs. EUR by 0.13% to 4.754, vs. GBP by 0.16% to 5.571, vs. JPY by 0.84% to 3.687, and vs. CNY by 0.35% to 1.514 but weakened vs. AUD by 0.08% to 3.000. Regionally, the ringgit appreciated vs. SGD by 0.19% to 3.084, vs. THB by 0.78% to 8.014, vs. PHP by 0.44% to 11.871, and vs. VND by 0.29% to 5,441, but depreciated vs. IDR by 0.28% to 3,399.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1892 and 4.1932 while our resistance is pinned at 4.2100 and 4.2140.

Source: AmInvest Research - 22 Dec 2021