Cautious sentiment persists amid geopolitical uncertainty and reserved Fed outlook
Despite the USD index trading stronger close to the 107.0 level, the ringgit appreciated slightly, trading within the 4.46–4.48 range against the USD. This resilience may partly reflect FX intervention and the repatriation of overseas funds. However, the negative yield differential between the 10-year MGS and UST widened to -60.0 bps, compared to -37.0 bps a month ago, prompting RM1.5b in net foreign outflows from Malaysian debt market. Meanwhile, investors continue to favour USD-long positions as the probability of a December rate cut dropped to ~60.0% from ~80.0% last week, reflecting signs of US economic resilience.
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