• Dollar inches higher on positive weekly labour data

• MYR to fluctuate in the range of 4.1695 and 4.1818 against US dollar

Global Highlights

The dollar index climbed slightly by 0.04% to 95.968. YTD, the dollar index is set to record a 6.8% gain. Among local data, the number of Americans filing new claims for unemployment benefits dropped to 198K in the week ending 25 Dec, remaining close to a 52-year low of 188K hit in the beginning of the month (cons. 208K). The number remained low despite surging Covid cases caused by Delta and Omicron.

Equities closed lower from its record high when the Dow Jones declined 0.25% to 36,398 while the S&P 500 fell 0.30% to 4,779. Both indices are set to post more than 20% gain this year. The UST10-year benchmark yield dropped 4.1bps to settle at 1.508%. Gold rose 0.55% to US$1,815/oz, recovering some losses from previous session.

The euro fell 0.21% to 1.133 but the British pound added 0.07% to 1.350 due to the diverging central banks’ stance. Both currencies are on their way to register losses of 7.2% and 0.7% respectively for 2021. Countries in the European continent are facing the surge of daily Covid cases as France recorded its second day of above 200K tally while the UK is challenged by a shortage Covid testing. On the data front, house prices in the UK jumped 10.4% y/y in December, above a 10% rise in November, making 2021 the fastest yearly growth since 2006.

The Japanese yen depreciated further by 0.11% to 115.08, setting a 11.6% loss going against the greenback throughout the year.

In the meantime, the Chinese yuan weakened by 0.08% to 6.373. The yuan is on course for a second consecutive year of gains in 2021 to become the best performing emerging market currency.

Crude oil was in the green when the Brent added 0.11% to US$79 per barrel and WTI gained 0.56% to US$77 per barrel. For the year 2021, crude oil is about to record more than 50% gain, driven by recovering demand for oil and shortages of supply. Markets are now looking forward to the OPEC+ meeting next week with the expectation that the cartel will stick to the current plan of raising production by 400K barrels per month.

Malaysia Highlights:

The ringgit crossed the 4.18 level as it strengthened 0.08% to 4.177, touching the strongest point in more than three weeks amidst a risk-on sentiment. The local unit was traded with a high of 4.1783 and low of 4.1702. YTD, the ringgit has weakened by as much as 4.2% against the dollar.

The FBM KLCI snapped its six-day winning streak as it closed lower by 0.09% to 1,544 while posting a 3.7% loss for the year 2021. Most global and regional indices also closed mixed. The lower position was driven by net selling from local retailers with RM52.4mil, while being offset by local institutions and foreign investors’ net buying with RM27.3mil and RM25.1mil respectively.

On the data front, producer prices in Malaysia rose by 12.6% y/y in November, slightly slower than the 13.2% a month earlier. This was the eighth straight month of a double-digit rise in producer inflation.

The IRS yields were mixed as the (3Y) -1.0bps to 2.745%, (5Y) -0.2bps to 2.955%, and (10Y) -1.0bps to 3.380%, but the (7Y) remained flat at 3.195%. KLIBOR was unchanged at 2.050%. Against major currencies, the ringgit mostly on the losing ground as it weakened vs. the EUR by 0.13% to 4.721, vs. GBP by 0.13% to 5.621, vs. AUD by 0.46% to 3.031, but strengthened vs. the JPY by 0.19% to 3.630 and vs. CNY by 0.16% to 1.526.

Against its regional peers, the ringgit was mixed as it appreciated vs. the SGD by 0.14% to 3.084, vs. IDR by 0.18% to 3,417, but depreciated vs. the THB by 0.28% to 7.994, and vs. VND by 0.09% to 5,459. The ringgit remained flat against the PHP at 12.194.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1645 and 4.1695 while our resistance is pinned at 4.1818 and 4.1868

Source: AmInvest Research - 31 Dec 2021