Fundamental Overview

▪ MYR moved in a tight range of between 4.124 and 4.128 before closing last week's session 0.12% higher against the USD. Despite the imposition of a full-scale lockdown, the local note managed to gain some ground against the greenback as Brent crude oil price rose to its highest level since 21st May 2019 (USD72.2/barrel) on OPEC+ supply discipline and demand recovery anticipation.

▪ MYR is expected to strengthen momentarily at around the 4.12 level as both the USD index and 10-year US Treasury (UST) yield fell on Friday, as a weaker-than-expected US jobs data eased concerns about a possible early Fed’s tightening. However, the local note may seesaw between 4.12 and 4.14 in the days ahead, reacting to US inflation data release and Malaysia’s key economic readings this week.

Technical Analysis

▪ 5-day EMA indicates that the USDMYR pair may maintain its position at the 4.128 level.

▪ Technically, the bias for the USDMYR pair has turned neutral for this week, with the pair projected to trade in the range of (S2) 4.123 - (R2) 4.131. However, the USD may regain some losses if the UST yields tick higher after a series of auctions this week, pushing the pair towards the 4.130 zone.

Source: Kenanga Research - 8 Jun 2021