USDMYR opened last Friday at 3.2500 levels and traded sideways without heavy volumes traded.

MYR

USDMYR opened last Friday at 3.2500 levels and traded sideways without heavy volumes traded. Market moved lower during fixing with heavy selling to a low of 3.2450 by interbank players and maintained around these levels ahead of the important data tonight. The second session of trading saw some late short covering buying the pair to a high of 3.2595.

A relatively slow for the local bond market last Friday, as MGS volumes closed the day with only MYR 480mio traded. Bond yields closed the day flat, with some bidding interest seen in the 10- and 30y MGS at current levels. Most players were sidelined ahead of the NFP data due tonight, and ahead of the long weekend here. Benchmark bonds closed the day at 3y 3.47%(+1) 5y 3.68%(-) 7y 3.81%(+1) and 10y 3.86%(+1).

Currencies

• US Non-Farm Payrolls will likely set the tone for the coming week before attention turns to the FoMC minutes from

the 16-17th September meeting. The market will be looking for further insight on the more hawkish dot-plot.

Across the other majors, the RBA, BoJ and BoE are universally expected to keep rates unchanged. Markets will be

looking for revisions to last month’s disappointing Canadian employment figures

• In Asia, Wednesday’s China fix, on their return from Golden Week, will be the focus along with New Loans data.

Elsewhere, equity markets will be remain cautious over Hong Kong's pro-democracy protests, and Bank Indonesia

are expected to keep policy rates unchanged

Rates

• Australia: The squeezing moves on Wednesday evening were both quick and powerful. It feels like positioning is

now a lot cleaner and risk/reward is much more skewed towards shorts into US NFP data tonight. We prefer to

position ourselves through curve steepening in AUD rates as our 10yrs will remain the higher beta instrument on a

sell off

• EM Asia: Profit-taking was the key theme here in the Asia rates space even while curves continued to grind lower

and while most markets had holidays sprinkled during the latter half of the week. Aged receivers in the money in

several markets such as Malaysia, Korea and India were taken off, while it was Thailand which continued its grind

lower as positioning was fairly lighter in this space

• Japan: As the new half FY began, JGB market saw reversal of the moves we saw last week (i.e. things back to where

we are). Wednesday we saw USTs rally by 12bps, Nikkei down by 2.5%, and USDJPY down by full 1pt, however

JGBs finished within 0.5bp move across the curve

Credit

• Flows in Asia credit into next week will be driven by the direction of flows from US accounts overnight. Also,

expect the tone of the US September jobs report coming out tonight to determine whether we will see spreads to

tighten further here in Asia in the short term, and/or widen in the medium term, as we get more color on where

this rates cycle will be headed

Commodities

• The gap between Brent crude and benchmark US oil prices narrowed to the smallest in 13 months, touching $2.3 a

barrel. The WTI/Brent strength opens up arbs for foreign barrels into the US and there have been reports of West

African barrels being booked to the North Sea with the option of being sent to the Gulf Coast. This would pressure

North American crudes, particularly coastal grades during the maintenance season.

• Overall the picture on base metals looks grim, however our belief is that when the Chinese return form hols they

will pick up cheap metal. However without a macro change we expect any rallies to be short lived and see them as

a selling opportunity.

• Silver has been the better performer (on the downside) and we believe there is scope for a further leg to the

downside. While PGMs are still struggling, there is no sign of Tocom liquidating their longs (currently showing

around 800k long). Perhaps the move lower in USDJPY may be the spark that lights that fuse.1205 is the key level

to watch for gold and we expect that participation from day traders and fast money will grow now that we are

testing 1200 again