Poised for marginal correction as stable US job report may temper dovish expectations
Fed Chair Powell, as anticipated, struck a dovish tone last Friday, effectively signalling the onset of the Fed’s easing cycle in September. This provided a stronger-than-expected boost to the ringgit, which appreciated sharply to around 4.31/USD. Although Powell emphasised that the timing and pace of rate cuts will depend on incoming economic data, markets have already fully priced in a 25 bps reduction, with an additional 25 bps cut about 30.0% priced in for September. The ringgit mainly found support from the narrowing of the negative yield differential between MGS and UST, which is now close to turning positive.
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