• Ringgit and KLCI gained.

Global Highlights

Dollar Index – The dollar remained at 106.076 due to Thanksgiving Day. The dollar has been on a downward trend for the past two weeks, and the Fed made it clear yesterday that the interest rate hike will be slower from this point forward, based on the latest minutes. We expect a 50bps increase in Dec’22 and another 25bps in Jan’23.

US equities & sovereign bonds – Wall Street closed due to Thanksgiving Day. Dow Jones up remained at 34,194, S&P500 remained at 4,027, and the Nasdaq remained at 11,285. The benchmark UST10Y yield also remained at 3.693% and the UST2Y at 4.477%, where the differential between the two is -78.46bps.

Euro – The euro gained by 0.13% to 1.041. The latest ECB account showed that ECB members were split on whether to raise rates by either 50bps or 75bps in the upcoming meeting on 15 Dec. Those who prefer 50bps rate hike argued that other tightening measures including changes in minimum reserves and financing adjustments on European banks are sufficient. Those who prefer the 75bps rate hike on the hand, argued that a higher interest rate is needed to bring back inflation at the desired level fast.

British pound – The pound gained by 0.48% to 1.211. The BOE Deputy Governor said that he prefers a larger interest rate hike in the upcoming meeting on 15 Dec. Consensus is expecting the BOE to raise rates by 50bps next month, pushing the rates from 3.00% to 3.50%.

Japanese yen – The yen gained by 0.76% to 138.54. Despite the gain, Japan’s manufacturing activities continued to be on a downward trend since Mar’22. The latest manufacturing PMI declined from 50.7 in Oct’22 to 49.4 in November, making this the first contraction since Jan’21. The contraction was reflecting to the cooling demand conditions amid slower global growth prospect next year, and inflationary pressure coming from the weaker yen.

Chinese yuan – The yuan gained by 0.12% to 7.152. Concerns on economic growth worsened, as Covid-19 infections in China increased to a record high of 31k cases. Authorities are now implementing lockdowns and other necessary measures, raising frustrations among locals. Some manufacturing operations were also affected due to the rules.

Korean won – The won gained by 1.76% to 1,328.44. The Bank of Korea earlier increased the interest rates by 25bps to 3.25%, slower than the 50bps rate hike made back in Oct’22, but in line with market’s expectation. The slower interest rate hike is to ensure that the economy falls into a sharper slowdown, but still necessary to fight against inflation. The BOK expects the economy for 2022 to grow by 2.6% but revised down the 2023 forecast from 2.1% to 1.7%.

Australian dollar – The Aussie dollar gained by 0.46% to 0.676 due to the weaker US dollar.

Commodities Highlights

Crude oil – Oil prices declined due to global growth concerns, and rising cases in China that will dampen demand. Brent down by 0.08% to US$85.34 per barrel and WTI remained at US$77.94 per barrel.

Gold – Gold gained by 0.32% to US$1,755/oz amid the weaker dollar.

Malaysia Highlights

Malaysian ringgit – The ringgit was trading between 4.4847 and 4.5750 and gained by 1.74% to 4.496 by end of the day. The sharp gain was reflecting to the news that Anwar Ibrahim was sworn in as the 10th Prime Minister of Malaysia.

Focus today will be on the inflation number for Oct’22, where consensus and us are expecting inflation to slow down from 4.5% y/y in Sep’22 to 3.9% y/y in Oct’22.

KLSE – The KLCI closed higher by 4.04% to 1,502. Detailed transaction showed that local institution and local retails were net seller of RM158.7mn and RM182.1mn. Foreign investors were net buyer of RM340.8mn.

Rates – The IRS yield for the 3-year down -11.00bps to 3.895%, 5-year down - 13.50bps to 3.980%, 7-year down -18.00bps to 4.070%, and 10-year down - 14.50bps to 4.215%.

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

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.500 and 4.515 while our resistance is pinned at 4.550 and 4.560.

Source: AmInvest Research - 25 Nov 2022