Further weakness likely as strong USD bias persists amid Trump-driven hedges
The ringgit depreciated for a fourth consecutive week, erasing its September gains and touching the 4.35/USD mark, as anticipated in our prior FX report. This downtrend reflects a stronger USD, with the USD index surpassing 104.0 and the 10-year US Treasury yield climbing above 4.2%, as investors de-risk ahead of the US election. Both FX and bond markets appear to be positioning for a Trump victory. This coupled with a recent wave of cautious remarks from Fed officials has raised the odds of a pause in December (~27.0%). Meanwhile, the PBoC's 25 bps rate cut had limited effect, though Malaysia's recent budget offered modest support to the ringgit.
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