• Dollar ends 2021 with a bang

• MYR to fluctuate in the range of 4.1625 and 4.1755 against US dollar

Global Highlights

The dollar index ended Friday on a weaker note by 0.31% to 95.670, the lowest since 18 November but YoY, it ended on stronger note, logging a 6.5% gain, thanks to the recovering US economy from Covid-19 and increasing prospects of a faster tightening monetary policy by the Fed.

Equities closed in the red as the Dow Jones fell 0.16% to 36,338 and the S&P 500 lost 0.26% to 4,766, but both remained close to its near-high record. This is in tandem with major indices that recorded spectacular year. The UST 10-year benchmark yield was sent slightly higher by 0.2bps to 1.510%. Gold climbed 0.80% to US$1,829/oz but was still 5.9% lower compared to the start of 2021.

The euro, on the other hand, rose 0.40% to 1.137, its highest in more than a month, while registering a 6.8% annual loss. The British pound was traded in the green as well as it climbed 0.24% to 1.353, but only 0.5% weaker compared to early 2021.

The Japanese yen was flat at 115.08, recording a tear-jerking 11.6% loss in 2021. In the meantime, the Chinese yuan strengthened 0.27% to 6.356, making it the best emerging market currency of the year as it gained 1.6% in 2021 after rising 6.3% in 2020.

Crude oil snapped its recent winning streak as the Brent tumbled 1.94% to US$78 per barrel and WTI dropped 2.31% to US$75 per barrel. Brent crude logged 52.2% gains while WTI at 57.9% gains per barrel in 2021, driven by the global economic recovery and supply-side issues.

Malaysia Highlights:

The ringgit strengthened further by 0.25% to 4.167, marking the 7th day of bullish trend, but ended the year 2021 on weaker foot by tracking 3.9% weaker level than the start of 2021. On Friday, it was traded with high of 4.177 and low of 4.1645. The local bourse’s FBM KLCI soared 1.55% to 1,568 on the last trading day of 2021. However, it remained one of the poorest performing stock indices in the region, registering a 2.2% decline for the year 2021.

Detailed transactions revealed that local institutions drove the inflow with RM218.0mil buying positions, while being offset by the net selling from local retailers with RM105.3mil and foreign investors with RM112.7mil.

The local bond market remained tepid but saw firmer trade. The 3-year benchmark was -2.0bps to 2.800%, 10-years -1.5bps to 3.585%, but the 5-years +2.0bps to 3.165%, and 7-years remained flat at 3.420%.

The IRS yield curve shifted lower; the (3Y) -0.5bps to 2.740%, (5Y) -1.5bps to 2.940%, (7Y) -0.5bps to 3.190% but (10Y) was flat at 3.380%. KLIBOR was unchanged at 3.380%.

Against major currencies, the ringgit was mixed as it appreciated vs. the EUR by 0.04% to 4.719, vs. AUD by 0.11% to 3.028, and vs. the JPY by 0.27% to 3.620, but depreciated vs. the GBP by 0.18% to 5.631, and vs. the CNY by 0.20% to 1.523. Regionally, the ringgit was also mixed against its peers, as it strengthened vs. the IDR by 0.19% to 3,423, vs. PHP by 0.41% to 12.243, and vs. the VND by 0.24% to 5,472, but weakened vs. the SGD by 0.06% to 3.086 and THB by 0.36% to 7.966.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1595 and 4.1625 while our resistance is pinned at 4.1755 and 4.1885.

Source: AmInvest Research - 3 Jan 2022