Fairly balanced risks, but potential USD rebound looms over risk assets
The USD initially gained support from EUR weakness, fuelled by diverging US-eurozone monetary policies, Trump’s tariff threats, less dovish FOMC minutes, and rising US consumer confidence. However, a series of developments have since weighed on the USD. ECB's Isabel pushed back against a 50 bps rate cut, and portfolio shifts into non-USD assets dragged the USD index (DXY) to almost below 106.0, benefitting the ringgit. Meanwhile the 10-year US Treasury (UST) yield fell below 4.30%, on reports that Scott Bessent may become Treasury Secretary and inflation data met expectations, further supporting the ringgit around the 4.44-4.45/USD level.
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