US dollar recorded another week of broad strengthening against other currencies as DXY US dollar index rose by +0.7% week on week to 109.76. The appreciation of US dollars was driven by expectations that the Fed would continue another large rate hike in Sep-22 meeting in view of the stubbornly high inflation.
Following stronger demand for US dollars, the euro and pound sterling both depreciated last week by 0.3%wow to USD1.002 and 1.5%wow to USD1.142, respectively. The depreciation in EUR was relatively smaller, backed by expectations for further rate hikes by the ECB; while weaker-than-expected economic data (e.g. monthly GDP and retail sales) resulted in the larger fall in GBP during the week.
With the broad strength in US dollars, the ringgit like other regional currencies depreciated, with the ringgit weakening by -0.8% wow to RM4.535, a new low which even surpassed the lowest level recorded during Asian Financial Crisis. The market seems to be more focused on the Fed’s next rate hike decision, consequently causing other currencies to fall against the USD. Oil price movement also failed to support the ringgit with Brent crude ending -1.6%wow lower at USD91.35pb (previous week: USD92.84pb).
