Kenanga Research & Investment

Ringgit Weekly Outlook - US Core PCE Reading and Job Reports to Influence Price Action

Publish date: Fri, 31 Mar 2023, 10:52 AM

Fundamental Overview

▪ Even though the ongoing banking sector's uncertainty has diminished USD demand as a safe-haven currency, the ringgit has not appreciated and has been trading within a tight range of between 4.40 - 4.42 (Monday to Thursday) against the USD, partly as the market has once again recalibrated its expectations on the Fed monetary policy direction (unwinding of dovish bets). Domestically, the release of Bank Negara Malaysia's annual report did not provide any significant impetus.

▪ The market may focus on US core PCE figure for today and a hotterthan-expected reading (consensus: 0.4% MoM; Jan: 0.6%) may prompt another round of reassessment of Fed rate expectations, strengthening the USD. However, for next week, focus will shift to the US jobs report, and any indication that tightening credit conditions are affecting the US labour market should strengthen the case of a Fed pivot. As the outlook is still highly uncertain, the ringgit is expected to continue trading above the 4.40 threshold.

Technical Analysis

▪ The USDMYR pair's outlook is neutral for next week, with the pair expected to trade near its 5-day EMA of 4.422 as the pair’s RSI is in the middle of the range (See ST Technical table).

▪ As the short-term bias for the pair has remained neutral, the pair is projected to hover in the range of (S1) 4.407 – (R1) 4.428 next week. However, should there be any safe-haven buying interest, the pair may trade higher around the (R2) 4.435 level.

Source: Kenanga Research - 31 Mar 2023

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