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US economic data to set direction for ringgit next week

Publish date: Sat, 02 Dec 2023, 02:20 PM

KUALA LUMPUR (Dec 2): The foreign exchange market is predicted to remain cautious next week, with all eyes on major data points such as the US nonfarm payroll (NFP) and unemployment rate, which will be critical for ringgit-US dollar performance.

Bank Muamalat Malaysia chief economist and social finance head Mohd Afzanizam Abdul Rashid said the markets will be keenly monitoring the performance of these statistics as the Federal Open Market Committee (FOMC) members gather for a last meeting for 2023 on Dec 12-13.

“On that note, the USDMYR is likely to oscillate around RM4.67 to RM4.68 next week as market participants will remain cautious before the FOMC meeting.

“The quarterly economic projection among the US Federal Reserve (Fed) staff will be closely monitored for the upcoming FOMC meeting especially on the US Fed Fund Rate forecast for 2024,” he added.

Meanwhile, Kenanga Investment Bank said that despite the absence of macro catalysts, the ringgit outperformed its Asean-5 peers against the US dollar on a Thursday-to-Thursday basis.

“This could be partly due to the country's strong fundamentals and government's persistent push towards fiscal consolidation. Most emerging currencies gained against the US dollar due to increasing fragility in the US housing market and the expectation of a Fed pivot.

“However, profit-taking activities and better US gross domestic product reading have limited the ringgit's gains," it said.

For the week just ended, the local note traded mixed after the FOMC minutes of its last meeting showed that the American central bank will remain cautious in its approach to monetary policy.

On a Friday-to-Friday basis, the ringgit depreciated against the US dollar to 4.6710/6760 from 4.6830/6875 a week earlier.

The local unit traded mixed against other major currencies.

It strengthened against the euro to 5.0900/0954 from 5.1059/1108 a week ago, was lower versus the Japanese yen to 3.1591/1627 from 3.1295/1327 and dropped vis-a-vis the British pound to 5.9168/9231 from 5.8767/8823 a week earlier.

The ringgit was also traded mixed against its Asean peers.

It fell against the Singapore dollar to 3.4973/5016 from 3.4903/4940 last week, was lower against the Indonesian rupiah to 301.5/302.1 from 300.8/301.3 and weakened against the Thai baht at 13.3301/3505 from 13.1949/2139 at the previous Friday’s close.

However, it inched up versus the Philippine peso to 8.43/8.44 from 8.45/8.46.

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