MYR: USDMYR Oversold on RSI After Another Week of Ringgit Gains

Cash ACGBs are 1-2bps richer today with the AU-US 10-year yield differential at +29bps. 

• At this level, investors may be tempted to position for a narrowing in the differential, as it sits near the top of its well-defined ±30bps trading range (see chart).
• Alas, such positions would take on notable risk going into tomorrow's October jobs data.
• However, such trades carry meaningful risk ahead of tomorrow’s October employment data. The unemployment rate rose 0.2pp to 4.5% in September.
• The unemployment rate is widely expected to normalise somewhat at 4.4% but there are a few economists who expect it to stay at 4.5% or fall back to 4.3%.
• Last month’s weaker-than-expected jobs report sparked a strong ACGB rally, which was later more than unwound following the much hotter Q3 CPI print.

Bloomberg Finance LP

The production and sales of new energy vehicles in October reached 1.77 million and 1.72 million units, representing year-on-year increases of 21.1% and 20.0%, China Securities Journal reported citing data by China Association of Automobile Manufacturers. New energy vehicles accounted for 51.6% of total new car sales, marking the first time their market share has exceeded 50%, the newspaper said. Automobile production and sales are both expected to hit a record high of exceeding 34 million units this year, largely stimulated by the trade-in policy, the Journal said citing Chen Shihua, deputy secretary-general of CAAM.

The yuan will remain stable with limited inverse fluctuations against the U.S. dollar, supported by economic fundamentals as timely strengthening of counter-cyclical adjustments will likely offset potential export weaknesses, Securities Daily reported citing Wang Qing, analyst with Golden Credit Rating. The dollar may show strong resilience against further declines given its significant fall earlier this year and the partly factored-in additional U.S. Federal Reserve rate cuts, said Wang. The yuan is expected to appreciate moderately overall next year assuming no unexpected changes in exports, the Daily said citing Ming Ming, chief economist at CITIC Securities.