• Dollar lost momentum.

Global Highlights

Dollar Index – The dollar closed lower on Friday by 1.82% to 110.877 as the market reassessed their position due to slower pace of interest rates hikes in the future.

On the macro front, the labour market continued to remain tight, as nonfarm payrolls increased by 261,000 in October, above of market’s expectation of 205,000. But it is on a declining trend. The unemployment rate inched up by 0.2 percentage point to 3.7%.

US equities & sovereign bonds – Wall Street gained as the Dow Jones rose 1.26% to 32,403, S&P500 up 1.36% to 3,771, and Nasdaq gained 1.28% to 10,475. We expect the equity market to be volatile this week as investors wait for the midterm election results and inflation report later on Friday.

The UST10Y benchmark yield increased by 1.150bps to settle at 4.158%, and the UST2Y down by 5.540bps to 4.658%, bringing the yields differential between UST10 and UST2 to narrow to -50.0bps.

Euro – The euro strengthened by 2.13% to 0.996 due to the weaker dollar. On macro data, the latest PMI composite for the Euro region fell from 48.1 in September to 47.3 in October, continuing its downward trend since April 2022. High inflation and energy shortage were cited as reasons for the decline.

British pound – The pound gained by 1.96% to 1.138 due to the weaker dollar. Despite the gain, we expect the pound to have more upside risk due to high inflation, cost of living issues in the UK, and deteriorating growth outlook.

Japanese yen – The yen gained by 1.11% to 146.620 due to the weaker dollar and intervention from the government.

Chinese yuan – The yuan strengthen by 1.59% to 7.185 following speculations that the authorities could ease some of its Covid-19 measures. But the authorities have confirmed that they will maintain their stance by imposing strict containment policy to control the outbreak.

Korean won – The won gained by 0.34% to 1,419.24, due to the weaker dollar. For 2023, the South Korean economy could grow below 2.0% due to the high interest rates and inflation.

Australian dollar – The Australian dollar gained by 2.88% to 0.647 due to the weaker dollar. Despite the recent gain, RBA has downgraded the Australia’s economic outlook by 0.3 percentage point to 2.9% for 2022. Growth forecast for 2023 and 2024 were downgraded to 1.4% and 1.6% respectively.

Commodities Highlights

Crude oil – Global oil prices gained due to tighter supply in the US oil inventories, higher activities during winter, and G7 members agreeing on a price cap on Russia’s oil. Brent gained by 4.12% to $98.57/barrel, and WTI was up by 5.04% to US$92.61/barrel.

Gold – Gold prices gained 3.21% and closed at US$1,682, as appetite for the commodity increases since the Fed’s meeting last week.

Malaysia Highlights

Malaysian ringgit – The ringgit was trading between 4.7345 and 4.7480 during the day and depreciated by 0.07% at 4.748.

The caretaker finance minister said that BNM has still room to tighten monetary policy since the economy was still growing strongly, despite the cumulative 100bps rate hike were made this year.

KLSE – The FBM KLCI up 1.26%, to 1,438. Detailed transactions showed that local institutions and local retails were net seller of RM38.4mil and RM26.9mil. Foreign investors were net buyer of RM64.3mil.

Rates – The IRS yield for the 3-year up 7.50bps to 4.030%, 5-year up 5.00bps to 4.205%, 7-year up 5.90bps to 4.345%, and 10-year up by 4.00bps 4.440%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.725 and 4.735 while our resistance is pinned at 4.740 and 4.750.

Source: AmInvest Research - 7 Nov 2022