To trade below 4.70/USD if US macro weakens, but political risks may cap USD downside
In line with our outlook, the ringgit appreciated towards the 4.70/USD level, initially buoyed by the soft core PCE reading last Friday. However, the local note faced brief pressure due to increased likelihood of a Trump victory this November. This concern was short-lived, as the diminishing political risk premium in Europe, combined with weakening ISM manufacturing and services figures, exerted downward pressure on the USD index (DXY). Despite higher job openings, signs of weakness in the US economy continue to bolster the case for a rate cut in September, benefiting the ringgit.
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