• Ringgit rallied on the strong GDP numbers.

Global Highlights

Dollar Index – The dollar rebounded by 0.35% to 106.660, as consumer inflation expectation data showed an increase from 5.4% in September to 5.9% in October.

On monetary policy, Fed Vice Chair Brainard said that the central bank is ready to slow down the pace of its interest rate increases, as recent inflation data showed a declining trend since June. We expect the Fed will raise rates by 50bps in December and 25bps in January 2023 with the fed funds rate should settle at 4.50 – 4.75%.

US equities & sovereign bonds – Wall Street traded lower as the Dow Jones down 0.63% to 33,537, S&P500 down 0.89% to 3,957 and the Nasdaq down 1.12% to 11,196.

The benchmark UST10Y yield was up by 4.110bps at 3.854%, and the UST2Y up by 5.670bps to 4.389%, bringing the yields differential between UST10 and UST2 to widen to -53.52bps.

Euro – The euro gained by 1.35% to 1.035. On the data front, the industrial production in the Euro Area slowed from 2.0% m/m in August to 0.9% m/m in September. The slower growth was due to lower output in energy production and durable consumer goods.

The latest IP number will provide some guidance as to where the Euro will be in the near term. But President Lagarde had said last week that additional rate hikes would be needed to bring inflation to the desired level.

British pound – The pound was down by 0.63% to 1.176 due to the stronger dollar. Focus will also be on the Budget this Thursday, where the government will unveil their plan to address the weakening economy, where measures including windfall tax on energy companies and tax-free allowance are expected.

Japanese yen – The yen gained by 1.54% to 138.810. The BOJ governor has said that the central bank’s ultra-loose monetary policy will be maintained, ruling out any possibility of tightening despite inflation is currently at 3.0%. This is to support the economic recovery. The governor also said that the labour market and wages will improve, in line with the economic recovery.

Chinese yuan – The yuan gained by 1.24% to 7.097. Despite the gain, the rising Covid-19 cases in China is still a concern despite changes made on the containment policy. Around 15k new cases were reported on Sunday, continuing its upward trend since the middle of October.

Korean won – The won gained by 4.27% to 1,318.92.

Australian dollar – The Aussie gained 1.27% to 0.670. Focus will be on the publication of RBA meeting minutes, where a clearer of guidance of the interest rates path will be given. Recently, the RBA raised the interest rates by 25bps to 2.85% to contain inflation.

Commodities Highlights

Crude oil – Oil reverses gains due to surging Covid-19 cases in China that is weakening demand for the commodity. OPEC also revised down oil demand growth forecast for this year and next year, citing mounting global economic challenges at the moment. Brent down by 2.97% to US$93.14 per barrel and WTI down by 3.47% to US$85.87 per barrel.

Gold – Gold prices gained for the fourth straight days as investors tone down their Fed’s hawkishness path gaining by 0.90% to US$1,771/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit was trading between 4.5848 and 4.6263 and gained by 0.59% to 4.595 yesterday, rallying on the strong GDP numbers that was recently reported.

KLSE – The KLCI gained by 1.27% to 1,468. Detailed transaction showed that the local institutions and local retails were net sellers of RM34.3mn and RM21.3mn respectively. Foreign investors were net buyer of RM55.6mn.

Fixed Income – The MGS for 3-year up 5.40bps to 3.880%, 5-year up 2.60bps to 4.250%, 7-year up 1.70bps to 4.350bps, and 10-year down 0.2bps to 4.420%.

Rates – The IRS yield for the 3-year up 4.20bps to 4.075%, 5-year up 3.50bps to 4.180%, 7-year up 3.00bps to 4.320%, and 10-year up by 2.20bps 4.420%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.590 and 4.600 while our resistance is pinned at 4.650 and 4.670.

Source: AmInvest Research - 15 Nov 2022