• Dollar continuing its downward trend throughout the week.

Global Highlights

Dollar Index – The dollar closed lower by 0.44% to 109.636 yesterday, continuing its downward trend throughout the week after the Fed toned down their hawkish view last week. The market is shifting focus to the outcome of the midterm election.

But the US CPI numbers that will be published tomorrow will impact more on the dollar. We expect the core inflation in October to ease to 0.5% m/m from 0.6% m/m in September.

The weakening of the dollar is likely to be temporary. We view that the dollar will strengthen to 114 in the 4Q22, and peak at 116 in the 1Q23.

US equities & sovereign bonds – Wall Street gained as the Dow Jones rose 1.02% to 33,161, S&P500 up 0.56% to 3,828, and Nasdaq gained 0.49% to 10,616.

The UST10Y benchmark yield declined by 9.01bps to settle at 4.123%, and the UST2Y down by 7.11bps to 4.651%, bringing the yields differential between UST10 and UST2 to widen to -52.72bps.

Euro – The euro strengthened by 0.54% to 1.007 due to the weaker dollar. Despite the recent gain, the European Commission painted a grim outlook on the Europe’s economy, saying that growth momentum has faded, and inflation is likely to stay higher for longer.

British pound – The pound gained by 0.26% to 1.154 due to the weaker dollar. Despite the gain, the bleak outlook in the UK’s economy persists. The BOE chief economist said the economy is going to a recession and interest rates will need to rise to contain inflation.

Japanese yen – The yen gained by 0.65% to 145.680 due to the weaker dollar. Sentiment in Japan improved after the removal of Covid-19 restrictions. Household spending in September increased by 2.3% y/y, slower than August’s growth of 5.1% y/y. This was the fourth month household spending grew in the positive territory.

Chinese yuan – The yuan lost by 0.01% to 7.231 following the upward trend of Covid-19 cases in China. New locally confirmed cases increased to 7,475 on 7 November, up from 5,496 the day before and the highest since May 2022.

Korean won – The won gained by 1.20% to 1,385.10, due to the weaker dollar. South Korea posted a current account surplus of US$1.61 bn in September (August: -US$3.04 bn), as outbound travel grew due to removal of pandemic related curbs.

Australian dollar – The Australian dollar gained by 0.43% to 0.651 due to the weaker US dollar. Despite the gain, consumer sentiment in Australia deteriorated, where the Westpac Consumer Confidence Index fell from 83.7 in October to 78.0 in November. The survey showed that Australians are planning to cut back their spending during Christmas due to the rising lending rates and high inflation situation.

Commodities Highlights

Crude oil – Global oil prices declined, as market was concerned on slowing demand from China amid rising trend of Covid-19 cases. Brent lost by 2.61% to $95.36/barrel, and WTI was down by 3.14% to US$88.91/barrel.

Gold – Gold prices gained 2.20% and closed at US$1,712, continuing the upward trend throughout the weak as the dollar was weaker.

Malaysia Highlights

Malaysian ringgit – The ringgit was trading between 4.7352 and 4.7442 during the day and gained by 0.09% at 4.736.

On a macro front, Malaysia’s IP production in September expanded by 10.8% y/y, which is slower pace relative to previous month’s number of 13.5% y/y. On a month-on-month basis, the overall production increased by 1.3% (August 2022: 3.9%).

This brings the year-to-date growth for IP is 7.9% (2021: 8.8%).

With the latest IP numbers continued to grow by double-digit, plus strong exports and private consumption, we expect the 3Q22 GDP numbers will be at 12.2%, better than 2Q2022’s growth of 8.9%.

We are also maintaining our all-year GDP forecast at 7.5% (base-case), with an upside of 8.5%.

KLSE – The FBM KLCI down 0.05%, to 1,441. Detailed transactions showed that local institutions and local retails were net seller of RM37.0mil and RM18.8mil. Foreign investors were net buyer of RM55.8mil.

Fixed Income – The MGS for 3-year up 4.00bps to 3.993%, 5-year up 3.00bps to 4.302%, 7-year up 6.00bps to 4.450bps, and 10-year up 4.00bps to 4.500%.

Rates – The IRS yield for the 3-year up 7.00bps to 4.115%, 5-year up 7.50bps to 4.300%, 7-year up 4.50bps to 4.445%, and 10-year up by 7.00bps 4.530%.

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

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 - 9 Nov 2022