MYR (4.074) ▲

▪ MYR strengthen to the level last seen in January as it gained momentum against a weakening US dollar on the back of improving average Brent crude oil price and Biden’s US presidential election win. The ringgit was lifted further by the positive development of COVID-19 vaccine and passing of Budget 2021 at policy stage.

▪ MYR is seen to remain boosted in December as the persistent weakness in the US dollar may continue to induce risk-taking. Nevertheless, OPEC+ meeting outcome, coupled with Malaysia COVID-19 situation could limit the potential for MYR gains.

IDR (14,120) ▲

▪ IDR rallied to a five-month high in November and was the top performer among Asian peers. The performance was driven by positive news on vaccine development and a revival in bond inflows despite a surprise policy rate cut by Bank Indonesia (BI).

▪ IDR is expected to strengthen in December on the back of COVID-19 vaccine optimism. Nevertheless, the momentum could be capped on concerns of another rate cut by BI in the near term.

THB (30.264) ▲

▪ THB ascended further, hitting its strongest level in over 10 months (USDTHB: 30.158) on 17th November, lifted by the risk-on sentiment following Biden’s victory in the US presidential election and COVID-19 vaccine progress.

▪ THB is expected to strengthen further amid sustained dollar weakness, offsetting the impact of the recent liberalisation of capital outflows and enhanced scrutiny of foreign investment in the Thai bonds.

CNY (6.578) ▲

▪ CNY reached its strongest level since June 2018 on the prospect of better US-CN relation amid Biden’s victory, favourable vaccine headlines and continued recovery in China’s economic data. The strength was slightly tempered by Trump’s plan to restrict 89 Chinese aerospace and other companies from purchasing US goods and technology.

▪ CNY to sustain an uptrend against a backdrop of risk-on sentiment and on its relative economic strength.

JPY (104.010) ▼

▪ JPY gained slightly against the USD in November mainly due to concerns about the US economy following surging COVID-19 cases, which prompted several US states' imposing new restrictions. However, the upside was capped by a risk-on sentiment buoyed by COVID-19 vaccine optimism.

▪ JPY could trade lower against the USD this month, given that the Bank of Japan is likely to maintain its ultraloose policy stance. Besides, positive news on vaccine development would further boost the global risk appetite, undermining the safe-haven yen.

Source: Kenanga Research - 1 Dec 2020