Fundamental Overview

▪ MYR ended last week stronger for the fourth consecutive time against the USD as Brent crude oil price breached the USD85.0/barrel mark and as the USD index (DXY) continue to trade below the 94.0 level. The weaker USD trend was attributable to a weaker-than-expected US factory data, strong US corporate earnings and monetary policy normalisation in other countries.

▪ In addition to strong commodity prices and Malaysia's improving growth prospects, the tabling of Budget 2022 on Oct 29 is expected to boost the ringgit vis-à-vis the USD to below the 4.15 level this week. However, the local note may face some headwinds if the US 3Q21 GDP figure beats estimates and if the market continues to hawkishly re-price the Fed’s tapering ahead of the FOMC’s November meeting.

Technical Analysis

▪ Based on the 5-day EMA technical indicator, MYR could weaken and depreciate by 0.18% to 4.158 this week.

▪ Technical-wise, MYR is expected to trend lower against the USD amid a potential rebound in the DXY this week, with the pair's immediate resistance awaits at (R1) 4.163, followed by (R2) 4.176. Inversely, the pair may test (S1) 4.144, and a sustained break below (S2) 4.138 should reaffirm MYR bullish trend.

Source: Kenanga Research - 25 Oct 2021