To trade within 4.35 – 4.40 against the USD with upside potential on dovish Fed signals
After a marginal 0.2% WoW decline last Friday, driven by stronger-than-expected US retail sales data, the ringgit rebounded to 4.38 against the USD. This rally is supported by a robust domestic economic outlook, highlighted by strong 2Q24 GDP growth and double-digit export expansion. The ringgit also benefits from the broader weakening of the USD, with markets fully pricing in a September Fed rate cut, a view reinforced by a sharp downward revision in nonfarm payrolls, indicating a softer US labour market. Coupled with dovish signals from the latest FOMC minutes, these developments have spurred RM1.6b in inflows into Malaysia’s debt market, providing further support to the currency.
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