More weakness expected ahead of US election and escalating Middle East conflict
The ringgit has extended its decline, nearing the 4.30/USD mark. While we anticipated some weakening this week, as highlighted in our previous FX report, the depreciation has exceeded expectations. This is largely due to the market finally aligning with the Fed's Dot Plot projections following Friday's robust US jobs data. The USD has also gained due to less dovish FOMC minutes and dovish signals from the ECB, BoE, and BoJ, coupled with escalating tensions in the Middle East. These factors have pushed the USD index near 103.0 and lifted the 10-year US Treasury yield above 4.0%.
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