Fundamental Overview

▪ Despite Malaysia's above-consensus 2Q21 GDP reading and more than 30.0% of its population have been fully vaccinated, the ringgit weakened against the strengthening USD amid growing safe-haven demand. In addition to higher USD index, the ringgit struggled to retain its strength as domestic COVID-19 cases continued to climb above the 20.0k mark and Brent crude oil price continued to test the USD70.0/barrel level.

▪ MYR is seen to trade between 4.23 to 4.25 this week, as the rapid spread of the Delta variant cases across the globe may continue to unnerve the oil markets, dragging the Brent crude oil price lower. The ringgit also has the potential to test the 4.30 threshold as the prime minister has expressed the intention to step down when he appears before the King today. In addition, any pro-dollar signal from the release of the FOMC minutes and July US retail sales data may put additional downward pressure on the local note.

Technical Analysis

▪ Based on our 5-day EMA, MYR may bounce back by at least 0.11% and trade at around 4.233.

▪ Technically, the US dollar trend might turn bearish this week if the US bond yields continue to drop, with an immediate support observed at (S1) 4.231 level. Conversely, if the (R1) 4.242 level is broken, then the USDMYR pair could attempt to move higher and test the (R2) 4.247 level.

Source: Kenanga Research - 16 Aug 2021