MYR (4.156) ▼

▪ MYR remained nearly unchanged by the end of October, as unexpectedly strong trade data was overshadowed by a rise in local COVID-19 infections, domestic political uncertainty, and unstable oil prices.

▪ MYR will likely trade lower in November amid persistent political uncertainty, as well as worsening COVID-19 conditions locally and abroad. However, this weakness may be limited should Budget 2021 be successfully tabled next week and should a global risk-on mode follow the US presidential election.

IDR (14,625) ▲

▪ IDR surprisingly rebounded in October to an almost twomonth high despite surging COVID-19 cases and heightened US election uncertainties. The better performance was attributable to Bank Indonesia’s decision that kept interest rate unchanged, and upbeat Chinese trade figures.

▪ IDR is expected to be one of the biggest beneficiaries among the Asian FX post US presidential election, as fading political uncertainties could prompt higher capital inflows into riskier assets. Nonetheless, downside risk remains on continued COVID-19 jitters.

THB (31.155) ▲

▪ THB strengthened on the appointment of a new finance minister, Trump’s hospital discharge and upbeat China’s economic data. The upside was partially capped by the intensified anti-government protests, leading to the declaration of a state of emergency in Bangkok, and a halt in COVID-19 vaccine trials.

▪ THB to remain buoyed by rising bets of a Biden victory in the US election and recovery optimism, amid fresh fiscal injection and the arrival of tourists with special 90-day visas. These would outweigh the impact of a prolonged political unrest.

CNY (6.686) ▲

▪ CNY surged to its strongest level since July 2018 on promising economic data, Biden victory hopes and Trump’s swift recovery from the COVID-19. The appreciation was slightly tempered by the PBoC’s removal of forward reserve requirements (20% → 0%).

▪ CNY to march higher on its relative economic strength, favourable yield differential and a potential Biden victory. However, the strength would be limited by a surge in global COVID-19 cases.

JPY (104.650) ▲

▪ JPY closed slightly higher against the USD in October, thanks mainly to risk aversion ahead of the US presidential election and surging COVID-19 cases globally. In addition, positive economic released in Japan also boosted the currency.

▪ JPY to ride lower this month on risk-on mode sentiment associated with the US election result, and economic recovery optimism buoyed by positive Chinese economic data. However, fears of COVID-19 resurgence would limit the downside.

Source: Kenanga Research - 2 Nov 2020