Summary BERNAMA - Ringgit Easier Against US Dollar In Early Trade www.bernama.com
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The Malaysian ringgit is experiencing a slight weakening against the US dollar ahead of important US economic data, with potential profit-taking but an overall positive outlook due to the possibility of US interest rate cuts.
Slides
Slide Presentation (12 slides)
Key Points
- The ringgit was easier against the US dollar in early trade today ahead of the US inflation data this week
- The market would focus on key data points such as the US Consumer Price Index (CPI), Producer Price Index (PPI), Japan's second quarter 2024 GDP, and China's CPI, trade and new loans
- There is possible mild profit-taking activity as the local note is overbought following recent gains
- The potential rate cuts by the US Federal Reserve next week will reduce the gap between the Fed Fund Rate and the Overnight Policy Rate (OPR)
- The ringgit is supported by the expected increase in China's CPI year-on-year data
Summaries
25 word summary
Ringgit slightly weaker against US dollar ahead of key US data. Potential profit-taking, but expected to remain positive overall due to potential US rate cuts.
51 word summary
The ringgit was slightly weaker against the US dollar, ahead of key US data. Potential profit-taking due to the ringgit being overbought, but expected to remain positive overall as potential US rate cuts would reduce the gap between Fed Funds Rate and Malaysia's OPR. Market anticipates FOMC's decision on rate cut.
112 word summary
The ringgit was slightly weaker against the US dollar in early trade, ahead of the release of key US economic data. Bank Muamalat Malaysia's economist noted potential profit-taking as the ringgit is currently overbought. However, the ringgit is expected to remain positive overall, as potential US rate cuts would reduce the gap between the Fed Funds Rate and Malaysia's OPR. The market is anticipating whether the FOMC will opt for a 25 or 50 basis point cut. The ringgit is also supported by the expected increase in China's CPI. Overall, the ringgit's performance reflects the market's focus on economic data and central bank actions, which are expected to influence the currency's movements.
422 word summary
The ringgit was slightly weaker against the US dollar in early trade today, ahead of the release of key US economic data this week. At 8.07 am, the local currency depreciated to 4.3400/3565 against the greenback from Friday's close of 4.3275/3330.
Bank Muamalat Malaysia's chief economist, Dr. Mohd Afzanizam Abdul Rashid, said the market would focus on the US Consumer Price Index (CPI) and Producer Price Index (PPI) to assess inflation, as well as Japan's second-quarter 2024 GDP and China's CPI, trade, and new loans data. He noted that there could be mild profit-taking activity as the ringgit is currently overbought following recent gains.
However, the ringgit is expected to remain positive overall, as potential rate cuts by the US Federal Reserve next week would reduce the gap between the Fed Funds Rate and Malaysia's Overnight Policy Rate (OPR). The US Fed will also share its latest macroeconomic projections, including the "dot plots" chart that indicates the direction of the benchmark interest rate. The market is now anticipating whether the Federal Open Market Committee (FOMC) will opt for a 25 or 50 basis point cut when they meet on September 17-18.
Meanwhile, Mohd Sedek Jantan, the head of investment research at UOB Kay Hian Wealth Advisors, said the US dollar has shown a softer performance in recent sessions, influenced by negative job market data, which has had a significant impact on the foreign exchange market.
Additionally, the ringgit is supported by the expected increase in China's CPI year-on-year data, scheduled for release today, which is anticipated to rise to 0.7% from the previous 0.5%. The month-on-month measure is expected to remain steady at 0.5%. Despite the higher real rates in China, which should ideally be very low or even negative given the current economic circumstances, Chinese officials have been slow in implementing the necessary support measures, although they continue to pledge more support.
These factors collectively suggest a favorable environment for the ringgit to trade higher against the US dollar today, according to Mohd Sedek.
The ringgit also traded lower against a basket of major currencies. It declined against the euro, the British pound, and the Japanese yen. However, the ringgit traded mixed against ASEAN currencies, with declines against the Indonesian rupiah and the Philippine peso, but gains against the Singapore dollar and the Thai baht.
Overall, the ringgit's performance in early trade today reflects the market's focus on key economic data releases and the potential actions of central banks, which are expected to influence the currency's movements in the near term.
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