• Dollar gains ahead of Powell’s testimony

• MYR to fluctuate in the range of 4.1900 and 4.2090 against US dollar

Global Highlights

The dollar index started the week on stronger note as it rose 0.28% to 95.991, recouping last week’s losses. The increasing dollar may due to the rising bets of high inflation data that will be due on Wednesday and the likelihood of Fed chair Jerome Powell's hawkish statement during his testimony before the Senate Committee. On the data front, wholesale inventories in the US rose 1.4% m/m in November 2021, slower than 2.5% m/m in October.

Equities extended its losses as the Dow Jones fell 0.45% to 36,069 while the S&P 500 slipped 0.14% to 4,670. The UST 10-year benchmark yield fell 0.2bps to 1.760%. Gold climbed 0.29% to US$1,802/oz.

Due to the higher dollar, the euro lost 0.30% to 1.133. Among local data, the euro area's seasonally-adjusted unemployment rate edged down to 7.2% in November 2021, the lowest level since March 2020 (cons. 7.2%).

The British pound slipped 0.08% to 1.358. The British government has ordered house builders to pay up to £4bil to help remove dangerous cladding from buildings following a deadly 2017 London fire, sending major house builders stocks lower.

The Japanese yen strengthened by 0.31% to 115.20 amidst a holiday in Japan.

In the meantime, the Chinese yuan firmed slightly by 0.03% to 6.376 despite worries over the first cases of Omicron reported in some cities.

Crude oil was traded in the red when Brent fell 1.08% to US$81 per barrel and WTI declined 0.85% to US$78 per barrel. This is due to concerns on oil supply reduction from Kazakhstan due to recent protest.

Malaysia Highlights:

the ringgit was traded firmer for the second consecutive day when it strengthened 0.17% to 4.201. It was traded with high of 4.204 and low of 4.1995. On the data front, Malaysia’s industrial production jumped 9.4% y/y, way higher than the previous month’s 5.5% y/y (cons. 7.3%). The unemployment rate was flat at 4.3% for the second consecutive month in November.

The FBM KLCI gained 0.46% to 1,550 amid mixed performances in regional indices. Detailed transactions revealed that local retailers and foreign investors were net buyers with RM5.41mil and RM36.82mil position, offset by local institutions' selling.

In the local bond market, the benchmark yield curve shifted higher with the 5-year +2.0bps to 3.270%, 7-year +1.0bps to 3.480%, and 10-year +1.0bps to 3.690%, but the 3-year remained unchanged at 2.850%.

The IRS yield curve shifted upwards as well; (3Y) +3.5bps to 2.845%, (5Y) +5.1bps to 3.120%, (7Y) +3.5bps to 3.300%, and (10Y) +5.0bps to 3.530%. KLIBOR fell by 1.0bps to land at 2.000%.

Against major currencies, the ringgit was mixed as it strengthened vs. the EUR by 0.09% to 4.758, and CNY by 0.15% to 1.518, but weakened vs. the GBP by 0.16% to 5.711, AUD by 0.31% to 3.020, and JPY by 0.06% to 3.645. Regionally, the ringgit was mixed as well when it eased vs. the SGD by 0.16% to 3.102 and IDR by 0.19% to 3,404, but firmed vs. the THB by 0.15% to 8.010, PHP by 0.06% to 12.210 and VND by 0.05% to 5,401.

MYR Outlook For The Day

We expect the MYR to trade between our support level of 4.1870 and 4.1900 while our resistance is pinned at 4.2090 and 4.2120.

Source: AmInvest Research - 11 Jan 2022