Global Highlights

The greenback extended its gains, climbing 0.12% to 93.055 and almost touching the highest level since March this year. The strong dollar sentiment was due to hawkish remarks made by one of the Fed’s officials, Raphael Bostic, who confirmed the view that the central bank will tighten its monetary policy sooner than initially expected, influenced by the upbeat labor data released recently.

Adding to the already better-than-expected labour data, the number of job openings in the US increased to 10mil in June, compared to 9.2mil in May. The healthy increase was driven by the most affected sectors during the pandemic – professional and business services, retails, and accommodation and food services. Also, the unit labour cost in the US for 2Q21 grew 1% up from a decline of 2.8% during the previous quarter. Looking forward, all eyes will be on inflation-related data that will be released tonight.

Equities rebounded to a record level when the Dow Jones closed higher by 0.46% to 35,265 while the S&P500 rose 0.10% to 4,437 as the Senate passed the US$1tril bipartisan infrastructure bill yesterday. UST 10-year yield added 2.5bps to 1.349% while gold price fell 1.9% to US$1,730/oz.

Tracking the stronger dollar movement, the euro shed 0.14% to 1.172, its lowest level since end-March. The euro has been declining for three consecutive days. Local data showed that the economic sentiment in the euro area dropped to 42.7 in the month of August, from 61.2 in July, amid a Covid-19 resurgence in the block.

In the meantime, the British pound also was bearish as it was closed 0.03% weaker at 1.384, the lowest level this week due to the stronger dollar.

The Japanese yen traded weaker by 0.25% to 110.57 as the strong dollar sentiment outweighed its safe-haven status. Fears of the Delta variant outbreak remained as new daily cases surged past the 12K mark.

The Chinese yuan hovered around 6.486 as investors digested the recent pandemic outbreak and regulatory crackdown in China.

Crude oil rebounded from recent losses as the Brent rose 2.30% to US$70.63 per barrel and WTI jumped 2.72% to US$68.29 per barrel despite the surge in Covid cases both in China and the US. The recently passed US$1tril package may have provided a boost for the oil consumption forecast and hence, an upward pressure on the oil prices.

Malaysia Highlights:

The market was closed on Tuesday due to the Awal Muharram holiday. On Monday, the MYR weakened by 0.22% to 4.229 while trading between a high and low of 4.231 and 4.223, respectively. The FBM KLCI rose 0.47% to 1,497. Meanwhile, Bursa Malaysia’s transactions showed foreign and local institution investors sold a net position of RM22.0mil and RM43.9mil, respectively. Local retail investors held on to a net buyers’ position at RM65.9mil.

The local bond market saw lacklustre trading activity with the 5-, 7-, and 10-year MGS rising 1.0bps to 2.655%, 1.0bps to 3.030%, and 2.0bps to 3.230%, respectively. The 3-year MGS stood unchanged at 2.305%.

 The IRS curve climbed higher; (3Y) 3.0bps to 2.355%, (5Y) 4.0bps to 2.630%, (7Y) 1.5bps to 2.850%, and (10Y) 2.0bps to 3.050%. Elsewhere, KLIBOR remain unchanged at 1.940%.

Against major currencies, the MYR mostly appreciated, up 0.23% to 4.970 vs. the EUR, 0.18% to 5.859 vs. the GBP, and 0.43% to 3.104 vs. the AUD. However, the ringgit weakened by 0.16% to 3.833 vs. the JPY and 0.16% to 1.534 vs. the CNY. Similarly, the ringgit depreciated against its Asean peers, down against (THB) 0.10% to 7.916, (IDR) 0.21% to 3,397, (PHP) 0.28% to 11.92, (SGD) 0.14% to 3.117, and (VND) 0.27% to 5,421.

MYR Outlook For The Day

We expect the MYR to trade between our support levels of 4.2187 and 4.2235 while our resistance is pinned at 4.2408 and 4.2484.

Key Financial Market Movement

Key Daily FX Charts

AM BANK RESEARCH

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