• US markets closed due to Labor Day

Global Highlights

Dollar Index – The dollar was unchanged at 109.534, as markets were closed due to Labor Day. The Dollar Index has been trading at its higher levels since the second quarter of 2002, reflecting pessimism among investors as the US, UK, Europe and China’s economies are slowing down.

US equities & sovereign bonds – Wall Street was closed due to the Labor Day holiday in the US. Dow Jones remained at 31,318, S&P 500 at 3,924 and the tech heavyweight Nasdaq at 11,631. The UST10Y benchmark yield was at 3.189%, while the UST2Y was at 3.387%, bringing the differential between them to -19.79bps.

Euro – The euro lost 0.25% to 0.993 due to pessimism in the economy as Russia has officially halted all gas supplies to the region. This will push up energy prices, especially moving towards winter. The ECB is scheduled to meet this Thursday with a possible 75bps rate hike increase due to this development.

British pound – The pound gained 0.07% to 1.152 as Britain finally welcomes Liz Truss as the new prime minister. On the macro front, the UK’s manufacturing PMI reading slid from 50.9 to 49.6 in August, further suggesting a weakening of the economy.

Japanese yen – The yen weakened by 0.29% to 140.600 as the Japanese government has requested a 110.05 trillion yen budget for next year, where a large chunk of the spending will go to defence and social spending cost.

Chinese yuan – The yuan shed 0.49% to 6.934, trading at the lowest level in more than two years, as China’s central bank cut the amount of foreign exchange reserves by 2 percentage points to 6% to support the weakening currency and the economy.

Korean won – The won declined by 0.65% to 1,371.92 due to the stronger dollar. The finance minister has pledged that the government will take a pre emptive measure if necessary to stabilise the market, as the Fed continues to increase the interest rates faster than expected.

Australian dollar – The Aussie dollar slipped 0.22% to 0.680. The RBA meeting is scheduled to conclude today with the market expecting the central bank to make another 50bps rate hike to cool price pressure and the tight labour market.

Commodities Highlights

Crude oil – Brent was up 2.92% to US$95.74 per barrel, and WTI remained at US$86.87/barrel after OPEC+ members agreed to cut production by 100K barrels per day in response to the possibility of a US deal with Iran.

Gold – Gold fell 0.10% to US$1,710/oz, continuing its downward trend since early August amid the stronger dollar.

Malaysia Highlights

Malaysian ringgit – The ringgit slid 0.13% to 4.492. Domestic market trading activities were slower as the market awaits the conclusion of BNM decision this Thursday, where we expect BNM to make another 25bps rate hike to address inflationary concerns.

KLSE – The ringgit slid 0.13% to 4.492. Domestic market trading activities were slower as the market awaits the conclusion of BNM decision this Thursday, where we expect BNM to make another 25bps rate hike to address inflationary concerns.

Fixed income – The 3-year remained at 3.340%, 5-year +1.0bps to 3.770%, 7- year remained at 3.940%, and 10-year +2.0bps to 4.030%.

Rates – The IRS yield for the (3Y) was down 1.0 bps to 3.615%, (5Y) -0.50bps to 3.775%, (7Y) +1.50bps to 3.855%, and (10Y) +0.50bps to 4.025%

Against major currencies – The ringgit was weaker against the THB and IDR, and gained against the EUR, GBP, AUD, JPY, CNY, SGD, PHP and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.480 and 4.495 while our resistance is pinned at 4.500 and 4.550.

Source: AmInvest Research - 6 Sept 2022