• Dollar lost momentum. OECD expects slower global economic growth for 2023.

Global Highlights

Dollar Index – The dollar lost by 0.57% to 107.222, as investors reassessed their position in the market amid lower inflation expectation going forward.  

Focus will be on the US durable goods orders later today, where consensus is expecting growth to be at 0.4% m/m for October (September: 0.4% m/m).

US equities & sovereign bonds – Wall Street traded higher as the Dow Jones up 1.18% to 34,098, S&P500 up 1.36% to 4,004 and the Nasdaq up 1.36% to 11,174.  

The benchmark UST10Y yield down 7.100bps to 3.756% and the UST2Y down 3.780bps to 4.515%, widening the inverted differential between the two to - 75.86bps.

Euro – The euro gained by 0.61% to 1.030 due to the weaker dollar. On a macro front, the Euro’s current account balance improved from -EUR20.8 bn in August to EUR3.81, caused by the higher imports and energy bills.  

Focus today will be on PMI numbers for November, where consensus is expecting the manufacturing to be at 46.0 (October 22: 46.4) and services to be at 48.0 (October 22: 48.6), both will continue to be in contraction.  

British pound – The pound gained by 0.53% to 1.189. The UK total borrowing reached GBP13.5bn in October, which was GBP4.4bn more than October 2021 (GBP9.2bn) due to the government’s support on household energy bills, and higher interest payments.  

Focus today will be on PMI numbers for November, where consensus is expecting the manufacturing to be at 45.8 (October 22: 46.2) and services to be at 48.0 (October 22: 48.8).

Japanese yen – The yen gained by 0.64% to 141.23 due to the weaker dollar. Japan’s finance minister is seeking approval for an extra budget to address the high inflation and the worsening cost of living issue in Japan. Earlier, the government submitted a JPY29.1tn supplementary budget, which is expected to be approved by early December 2022.

Chinese yuan – The yuan gained by 0.35% to 7.140. Despite the stronger currency, Covid-19 cases in China continues to be on an upward trend this week, where around 29k new cases were reported yesterday. Downside risk to the economy remains high as consumer confidence remains weak plus the worry over property crisis.  

The financial regulators have also asked banks to support lending to the property and construction developers. PBOC is also planning to provide around CNY200bn interest-free loans to support the sector.

Korean won – The won weakened by 0.13% to 1,356.89. Consumer confidence in South Korea deteriorated from 88.8 in October 22 to 85.6 in November 22. Reasons for the decline was concern on future household income and future household spending, due to high inflation and high interest rates environment.

Australian dollar – The Aussie dollar gained by 0.67% to 0.665 due to weaker US dollar. RBA governor earlier said that Australia needs to brace for a higher inflation in the future, citing rising trade protectionism and prolonged supply chain disruption.  

On monetary policy, he said that the RBA will pay attention to the household spending, wage growth, and price setting behaviour in deciding the how high the interest rates need to be increased.

Commodities Highlights

Crude oil – Oil prices gained, as Saudi Arabia signalled that they are ready to cut production to support prices if needed. Brent up by 1.04% to US$88.36 per barrel and WTI up by 1.53% to US$80.95 per barrel.

Gold – Gold gained by 0.13% to US$1,740.25/oz amid the weaker dollar.

Malaysia Highlights

Malaysian ringgit – The ringgit was trading between 4.5712 and 4.5840 and gained by 0.04% to 4.579 by end of the day.  

We expect the MYR to trade between our support level of 4.565 and 4.575 while our resistance is pinned at 4.600 and 4.610.

KLSE – The KLCI closed lower by 0.46% to 1,441. Detailed transaction showed that local institution and local retails were net buyer of RM65.0mn and RM91.0mn. Foreign investors were net seller of RM156mn.

Fixed Income – The MGS 3y up 3.0bps to 3.930%, 5y up 1.0bps to 4.290%, 7y up 3.0bps to 4.350%, and 10y up 1.0bps to 4.410%.

Rates – The IRS yield for the 3-year down -1.00bps to 4.065%, 5-year up 0.50bps to 4.185%, 7-year down -2.00bps to 4.320%, and 10-year up 1.00bps to 4.465%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.565 and 4.575 while our resistance is pinned at 4.600 and 4.610.

Source: AmInvest Research - 23 Nov 2022