• OPEC+ agrees to cut production by 2 million barrels per day.

Global Highlights

Dollar Index – The dollar ended stronger by 1.04% to 111.208. Services activities is expected to remain strong during the winter season, despite inflation numbers are still high, as shown from the latest services PMI at 56.7 in September (56.9 in August).

US equities & sovereign bonds – Wall Street was down as the Dow Jones lost 0.14% to 30,274, S&P500 down 0.20% to 3,783, and Nasdaq down 0.25% to 11,149.

The UST10Y benchmark yield rose by 11.990bps to settle at 3.753%, and the UST2Y up by 5.550bps to 4.148%, bringing the yields differential between UST10 and UST2 narrowed to -39.53bps.

Euro – The euro fell by 1.02% to 0.988, due to stronger dollar. On monetary policy, ECB policymaker said that the interest rate hike is needed to cool down core inflation, which is currently at 4.8%. The ECB meeting is scheduled to meet on 27 Oct, where consensus is expecting a 75bps rate hike.

British pound – The pound weakened by 1.31% to 1.133. Pessimism is brewing on the government’s lack of commitment in addressing sluggish economy. The latest PMI composite is at 49.1 and remained in the negative territory and the worst reading so far this year.

Japanese yen – The yen depreciated by 0.35% to 144.640, supported by the better reading of the services PMI (52.2 in September vs. 49.5 in August), as the economy reopens for international tourism, hoping to improve the sluggish economy.

Chinese yuan – The yuan remained at 7.116 due to Golden Week.

Korean won – The won gained by 1.07% to 1,411.01. The high interest rates are affecting the inflation situation in Korea, where demand has cooled off. Headline inflation only increased by 0.3% m/m, which is slower than year-todate’s average of 0.5%, and core inflation declined for the first time this year by -0.1% m/m.

Australian dollar – The Australian dollar fell by 0.20% to 0.649, trading around the same level post the RBA meeting two days ago. On the macro side, the retail sales in Australia grew slower by 0.6% m/m. The slower growth reflecting global pessimism that is also affecting the Australia's economy.

Commodities Highlights

Crude oil – Brent gained by 1.71% to $93.37/barrel, and WTI was up by 1.43% to US$87.76/barrel, rebounded back to the same level as back in early September 2022 as OPEC+ has agreed to cut production by around 2 million barrels per day to support oil prices. This will be the biggest production cut ever made since the pandemic, and also complicate major central bank’s fight against inflation as commodity prices are expected to trade higher due to this development.

Gold – Gold prices traded lower by 0.57% and closed at US$1,716, losing its gaining momentum for the past several days. As the Fed is likely to continues to stick to its hawkish plan to move the Fed Funds above the 4.5% mark.

Malaysia Highlights

Malaysian ringgit – The ringgit continued its strengthening trend, traded between 4.6295 and 4.6425 during the day, and closed stronger by 0.29% at 4.630 due to a positive outlook. We expect ringgit to trade between 4.625 and 4.635 and our support level at 4.640 and 4.650. The outcome of the annual budget and US's job market could determine the direction of the ringgit in the near term.

KLSE – The FBM KLCI up 0.79%, to 1,421. Detailed transactions showed that local institutions were net buyer of RM101.1mil. Local retailers and foreign investors were net sellers of RM33.0mil and RM68.1mil.

Rates – The IRS yield for the 3-year up 9.70bps to 3.880%, 5-year up 7.50bps to 4.045%, 7-year up 10.00bps to 4.210%, and 10-year up by 4.00bps 4.340%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.625 and 4.635 while our resistance is pinned at 4.640 and 4.650.

Source: AmInvest Research - 6 Oct 2022