MYR (4.286) ▲

▪ MYR strengthened in June due to the improvement of Malaysia’s manufacturing PMI (May: 45.6; Apr: 31.3) and the implementation of the Recovery Movement Control Order. However, the gain was cut short as global financial market turned risk off and investors turned towards safe-haven assets, in particular the US dollar.

▪ With improving oil prices, MYR is expected to marginally appreciate in July. In addition, MYR will benefit from the recovery of global trade and demand for commodity as the world economies re-open. However, some uncertainties remain on renewed US-China trade tensions and fears of COVID-19 second wave infections across the globe.

IDR (14,265) ▼

▪ IDR continued to gain in June as the government eased lockdown measures despite a rise in the number of COVID-19 cases. However, the momentum was partially eroded by Bank Indonesia’s decision to cut rates by 25 bps and its dovish statement as well as a bleak growth outlook.

▪ Surging COVID-19 cases domestically and fears of thesecond wave virus infections among its major trading partners is expected to exert downside pressure on IDR going forward.

THB (30.906) ▲

▪ THB pierced below 31.0 for the first time since February 5th, as further economic reopening, the BoT’s optimism of a recovery in the 2H20 and announcement of a domestic tourism stimulus overshadowed the simmering US-CN tension.

▪ As Asia’s third largest gold trading hub, Thailand’s local note is expected to appreciate further, as gold prices remain elevated amid spikes in COVID-19 cases inthe US. However,THB upside may be partially capped if the BoT deploy measures to curb the rise of the currency.

CNY (7.065) ▼

▪ CNY strengthened following PBoC’s USD60.0b credit easing measures, modest recovery in May’s economic data and White House’s assurance that the phase-1 US-CN trade deal remained intact. These offset pressures arising from the Fed’s bearish outlook and India-China border clash.

▪ A bearish trend is expected this month owing to a resurgence of COVID-19 infections, re-implementation of lockdown in Beijing and a whipsawing US-CN relation.

JPY (107.730) ▲

▪ JPY inched up marginally in June, and relatively stable against USD on the back of risk-off sentiment amid fears of virus resurgence and the escalation of US-CH relation. It was further reinforced by the BOJ decision on boosting financing support for businesses hit by the pandemic.

▪ While both JPY and USD are considered as a safe-haven currency, JPY seems to be in a better position given the sharp resurgence in the US coronavirus cases

Source: Kenanga Research - 1 Jul 2020