• Dollar weakened further.

Global Highlights

Dollar Index – The dollar weakened further, declining by 0.12% to 106.280. Macro data were mixed yesterday, where industrial production declined by - 0.1% m/m in October, wiping off gain of 0.1%m/m in September due to higher lending rates and higher inflation that weighed on demand.  

Retail sales however, grew by 1.3% m/m after posted zero growth in September. Growth was due to a higher spending in the motor vehicles segment, food services and retails.

US equities & sovereign bonds – Wall Street traded lower as the Dow Jones down 0.12% to 33,554, S&P500 down 0.83% to 3,959 while the Nasdaq declined 1.54% to 11,184.  

The benchmark UST10Y yield lost 7.970bps to 3.690% while the UST2Y fell 5.060bps to 4.338%, widening the inverted differential between the two to widen to -64.83bps.

Euro – The euro gained by 0.21% to 1.035 due to the weaker dollar. The ECB Vice President earlier said that there is rising risk on the Euro’s financial stability amid sharp interest rates increase and poor economic prospect. He also suggested that the reduction of the ECB’s bond holdings should be done in a gradual manner without causing any severe instability in the financial market.  

Focus later today will be inflation rate, where market is expecting inflation to increase from 9.9% in September to 10.7% in October.

British pound – The pound gained by 0.41% to 1.191 due to the weaker dollar. Despite the gain, inflation in the UK continued to be on the upside, increasing from 10.1% y/y in September to 11.1% y/y in October. This is also higher than market’s expectation of 10.7% y/y. It is also the highest inflation rate since October 1981, driven by higher prices from housing and household services (26.6%).

Japanese yen – The yen weakened by 0.16% to 139.500. Japan’s economy continued to show some weaknesses. Japan’s core machinery orders continued to decline by 4.6% m/m in September (August: -5.8% m/m), due to uncertainties from the global economy, weaker yen and higher import costs.

Chinese yuan – The yuan weakened by 0.75% to 7.098 Weakness in China’s real estate market continues, as average new home prices contracted further from -1.5% y/y in September to -1.6% y/y in October. Growth has been in the negative territory since May 2022, due to mounting debt crisis among developers and impact from the Covid-19 containment measure.

Korean won – The won weakened by 0.60% to 1,325.68. Apartment prices in South Korea fell by 1.2% y/y, the sharpest rate in 19 years due to the higher lending rate. The BOK will be meeting next week on Thursday, where consensus is expecting a modest 25bps increase will be made, pushing the interest rate to 3.25%.

Australian dollar – The Aussie dollar weakened by 0.22% to 0.674. Australia’s wage price index (seasonally adjusted) accelerated from 2.6% y/y in the 2Q22 to 3.1% y/y in the 3Q22. The wage price growth has been on an increasing trend since the 1Q21, and this will be the highest reading since 1Q13.  

Wage growth in the private sector was the main driver, growing by 3.4% y/y, the highest pace since 4Q12 amid the economic recovery.  

Focus later today will be Australia’s unemployment rate for October, where market is expecting the rate to remain at 3.5%.

Commodities Highlights

Crude oil – Oil prices declined due to weaker demand from the global market. OPEC has said that the organisation is ready to intervene the oil market to support prices. Brent down by 1.07% to US$92.86 per barrel and WTI down by 1.53% to US$85.59 per barrel.

Gold – Gold price lost its momentum after gaining for the past five days, declining by 0.29% to US$1,774/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit was trading between 4.4980 and 4.5525 and weakened by 0.03% to 4.544.  

Focus later today will be trade numbers for October, where market is expecting the growth to be at 24.1% for exports and 33.0% for imports.

KLSE – The KLCI down by 0.15% to 1,448. Detailed transaction showed that the local institutions and local retailers were net buyers of RM39.2mn and RM40.7mn respectively. Foreign investors were net seller of RM79.9mn.

Fixed Income – The MGS for 3-year down 2.0bps to 3.805%, 5-year down 2.50bps to 4.150%, 7-year down 2.0bps to 4.250bps, and 10-year down 2.5bps to 4.310%.

Rates – The IRS yield for the 3-year up 0.50bps to 4.005%, 5-year down 2.75bps to 4.095%, 7-year remained at 4.220%, and 10-year down by 4.50bps 4.315%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.550 and 4.560 while our resistance is pinned at 4.610 and 4.620.

Source: AmInvest Research - 17 Nov 2022