• Dollar slides for the second straight sessions

Global Highlights

Dollar Index – The dollar index fell 0.29% to 104.790, marking the second consecutive days of falling as market players become worried on the imminent slowdown, induced by the aggressive tightening Fed. Now the market has priced in a slower 50bps rate hike during its 13th - 14th December meeting next week. This is in line with our views.

US equities & sovereign bonds – Wall Street was on the upside as the Dow Jones rose 0.55% to 33,781, S&P500 climbed 0.75% to 3,964 and Nasdaq added 1.13% to 11,082.  

The UST10Y benchmark yield added 6.5bps to 3.482%, while the UST2Y rose 5.2bps to 4.308%, narrowing the inverted differentials slightly to 82.6bps.

Euro – As the dollar recedes, the euro rose 0.48% to 1.056, hovering around its six-months high. The ECB will meetup next week on 15th December to decide on its policy. We think that the central bank will do 75bps rate hike as the inflation in the region is still hot.

British pound – The pound also on the upside as it climbed 0.58% to 1.220. The BoE officials will also meet up next week on 15th December where they will hike its interest rate by 50bps as well amidst slowing economic yet still high inflation.

Japanese yen – The yen weakened marginally by 0.04% to 136.67 despite the improved GDP reading. Japan’s growth during 3Q22 was revised to -0.2% q/q, slightly better than initial estimate of -0.3% q/q (2Q22: 1.1% q/q), driven by better reading in government spending and trade surplus. On another note, the gauge for services sector sentiment dropped to 48.1 in Nov’22, from 49.9 in the previous month, and worse than market consensus of 50.7 as the fear on global slowdown is rising.

Chinese yuan – The yuan appreciated 0.04% to 6.967. The market is being positive right now on China due to the easing Covid policy. Hong Kong’s Hang Seng surged by more than 3.0% while the yuan is currently trading at three months high. Although, we remain cautious over the lifting of Covid’s rules prospect as it will take time before any significant rebound can be seen due to the uncertainties over low vaccination rate remains.

Korean won – The won strengthened 0.34% to 1,318, almost touching its four-months high again.

Australian dollar – The Aussie dollar rose 0.65% to 0.677. On the data front, Australia’s trade surplus narrowed by a minimal AU$0.22bn to AU$12.22bn in Oct’22 but still above market forecast of AU$12.1 surplus. Exports contracted 0.9% m/m due to sluggish global demand and China’s Zero-Covid policy.

Commodities Highlights

Crude oil – Oil prices tumbled again for the fifth straight days as the focus is now on the imminent global slowdown despite the major closure of the Canada-to-US crude pipeline. Brent dropped 1.32% to US$76 per barrel while WTI fell 0.76% to US$71 per barrel.

Gold – Gold rose 0.16% to US$ 1,789/oz as the dollar softens and investors become cautious with global economic prospect.

Malaysia Highlights

Malaysian ringgit – The ringgit depreciated by 0.01% to 4.398 and traded within the range of 4.409 and 4.391.  

The BNM’s international reserves now stands at US$109.7bn end of Nov’22, down by USD7.2bn from its peak of USD116.9bn in Dec’21. Due to the availability of data, adjusted reserves stands at US$80bn in Oct’22, down by USD28.6bn from its peak of USD109.4bn in Nov’21.  

The latest reserves suggest it is equal to 5.3x months of retained imports of goods and services and only 1.0x of total short-term external debt.

KLSE – The KLCI traded lower by 0.06% to 1,466. Detailed transactions showed that local institutions were the net buyers with RM108.9mil, while local retailers and foreign investors were the net sellers with RM9.0mil and RM99.9mil, respectively.

Fixed Income – Local bond market sideways movement as the 3-year -1.0bps to 3.640%, and 5-year -3.0bps to 3.835%. But the 7-year and 10-year remained flat at 3.985% and 4.070%.

Rates – The IRS yield for the (3Y) -4.0bps to 3.625%, (5Y) -7.5bps to 3.660%, (7Y) -3.5bps to 3.850%, and (10Y) -3.0bps to 3.960%.

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

Ringgit Outlook for the Day

We expect to trade MYR between our support level of 4.370 and 4.380 while our resistance level is pinned at 4.420 and 4.430.

Source: AmInvest Research - 9 Dec 2022