Fundamental Overview

▪ MYR continued to gain ground against the USD last week, as Brent crude oil price recorded a weekly gain of more than 6.0% on demand optimism, whereas the USD index slipped to a three-week low on falling US Treasury (UST) yields. The 10-year UST yield dropped to below 1.6% for the first time since 11th March despite a stronger-than-expected US inflation and retail sales readings.

▪ MYR is expected to trade in a tight range this week as lack of market-moving catalysts will likely keep the 10-year UST within the 1.5-1.6% range and limit further upside in the Brent crude oil price. The daily rise in domestic COVID-19 cases could put some pressure on the local note as investor sentiment may turn cautious about the likelihood of a fourth wave of infection.

Technical Analysis

▪ EMA technical indicator signals a reversal in the USDMYR trend, with the ringgit expected to depreciate marginally against the greenback by 0.05% to 4.128 this week.

▪ The USDMYR pair may trade with a neutral-to-bullish tone this week and break either above the (R1) 4.133 level or dip below the (S1) 4.121 level. Whichever way, the price movement would also be influenced by news flows and events.

Source: Kenanga Research - 19 Apr 2021