• Dollar index remains subdued

• MYR to fluctuate in the range of 4.1775 and 4.1936 against US dollar

Global Highlights

The dollar index rose 0.08% to 96.093, near its 96 level despite a hawkish Federal Reserve’s stance during its meeting recently. On the pandemic development, over 1,000 more US flights were cancelled amid the Omicron Covid surge. The average number of new US cases has risen 45% to 179,000 per day over the past week, although early data showed that the severity of new variant is much more subdued than that of Delta.

Equities rose as the Dow Jones climbed 0.98% to 36,302 while the S&P 500 soared 1.38% to 4,791, its new record high. The UST 10-year benchmark yield dropped 1.7bps to 1.476%. Gold resumed its bullish trend as it added 0.10% to US$1,812/oz, snapping its one-month choppy session.

The euro inched higher by 0.08% to 1.133. Several countries across Europe have rolled out new social-distancing measures, including Belgium, the Netherlands and Germany to stop surging Covid infections driven by Omicron, while governments in France and Britain remained hesitant to reinstate restrictions. The British pound added 0.41% to 1.344, its strongest level in five weeks, benefitting from the better-than-expected GDP data and recent interest rate hike by the BoE.

The Japanese yen eased 0.43% to 114.87. Japanese officials are on high alert as Omicron has started spreading locally. On the data front, retail sales in Japan increased 1.9% y/y in November, rising for the second month in a row (cons. 1.7%).

In the meantime, the Chinese yuan was little changed as it depreciated 0.05% to 6.371 following the pledge by the PBoC for greater support in the real economy, and will make monetary policy more forward-looking and targeted. Also, China reported its highest daily rise in local cases in 21 months over the weekend as infections more than doubled in the city of Xi'an.

Crude oil touched its highest in a month as Omicron fears subsided for the 2022 outlook. Brent surged 3.23% to US$79 per barrel while the WTI soared 2.41% to US$76 per barrel.

Malaysia Highlights

The ringgit further booked stronger position against the USD as it firmed 0.30% to 4.183, the strongest since mid-November, while traded with a high of 4.1975 and low of 4.1813.

The FBM KLCI ended higher by 1.15% at 1,534, in tandem with global stocks' performances. It was driven by net buying from local institutions and foreign investors at RM59.4mil, offset by local retailers’ net selling position.

In the local bond market, the benchmark yield curve steepened when the 7-year +4.0bps to 3.450%, and 10-year +3.0bps to 3.590%, but 3-year and 5-year remained at 2.850% and 3.170%.

The IRS yield curve was also unchanged with (3Y) at 2.750%, (5Y) at 2.950%, (7Y) at 3.195%, and (10Y) at 3.380%. KLIBOR was flat at 2.050%.

Against major currencies, the ringgit outshone as it strengthened vs. the EUR by 0.58% to 4.731, vs. GBP by 0.28% to 5.605, vs. AUD by 0.76% to 3.016, vs. JPY by 0.77% to 3.641, and vs. CNY by 0.38% to 1.523. Regionally, the ringgit was on the winning side as well as it appreciated vs. the SGD by 0.29% to 3.081, vs. THB by 0.50% to 8.008, vs. IDR by 0.53% to 3,401, vs. PHP by 0.68% to 12.012, but unchanged vs. the VND at 5,463.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1725 and 4.1775 while our resistance is pinned at 4.1936 and 4.1986.

Source: AmInvest Research - 28 Dec 2021