The ringgit opened higher versus the US dollar on Wednesday (Nov 9), as demand for the greenback weakened in thin trading, analysts said.
At 9am, the local note had increased marginally to 4.7330/7350 against the US dollar, from Tuesday’s close at 4.7340/7385.
SPI Asset Management managing director Stephen Innes said the lower US dollar index was due to the markets now beginning to price in peak US Federal Reserve’s interest rates, on the back of the US midterm election results.
“The political gridlock reduces the possibility of expansionary fiscal policy that feeds Fed rate expectations.
“Lower rates volume should carry into diminished equity and foreign exchange volume that benefits growth equities, driving a weaker US dollar. Besides, the midterm election-driven dollar weakness could also ignite long oil and industrial metals trades,” he told Bernama.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said from a technical standpoint, considering that the US dollar had gained so much ground over the past few months, it had now entered a resistance region on the daily chart, and a bearish move would likely take place in the next few days.
“The double top formation on the daily chart also signals the inability of buyers to continue pushing the market higher, which is characterised as exhaustion.
“The next points of interest that can act as support on the daily chart are at 4.7100 and 4.6500,” said Diniz.
Meanwhile, the ringgit was traded lower against a basket of major currencies.
It eased against the Singapore dollar to 3.3807/3824 from 3.3744/3781 on Tuesday, and fell vis-a-vis the yen to 3.2467/2483 from 3.2371/2404 previously.
The local currency also weakened against the euro to 4.7623/7644 from 4.7345/7390 at Tuesday’s close, and was down versus the pound to 5.4557/4580 from 5.4389/4441.
Meanwhile, The U.S. dollar wavered on Wednesday, as traders awaited results from US midterm elections and inflation data that could disappoint hopes for a slowdown in rate hikes, while cryptocurrency markets attempted to steady after news of a bailout of exchange FTX.
The greenback has been under downward pressure from bets on the Federal Reserve easing back on interest rate rises and on China reopening and driving growth.
It touched multi-week lows against the euro, Australian dollar and New Zealand dollar overnight, then edged off those levels early in the Asia session, Reuters cited.
The dollar last traded at US$1.1006 per euro EUR=EBS and bought ¥145.20, dipping below its 50-day moving average against the yen for the first time in nearly three months.
The US dollar index, which is heading for its best year in almost four decades, is down about 0.9 per cent so far this week and hovered at 109.73 today.
“We all know the dollar will probably turn at some point — when is the big question,” said Bank of Singapore currency analyst Moh Siong Sim.
“My view is the pullback is consolidation, rather than the end of the dollar uptrend, and that’s because I think the Fed is still not done with the inflation fight unless the data really gives us comfort that inflation is about to ease off for good.”
Early midterm-election results showed several Republican senators had easily won re-election. Investors expect Republican gains, and some analysts view likely Congressional gridlock as a slight negative for the dollar if it limits fiscal spending.
Results could take days to emerge. Tomorrow, US inflation data is on the horizon. Economists expect a slowdown in the pace of annual headline inflation to 8 per cent.
“Although the Fed may soon slow the pace of its tightening, there remains much more work to be done,” said analysts at ANZ Bank.
The Australian dollar was below overnight highs and just under US$0.65 at US$0.6496 in morning trade. The New Zealand dollar wobbled 0.1 per cent lower to US$0.5951.
Sterling held at US$1.1539.
Cryptocurrency markets have had a wild few days, and were attempting to find a floor in the Asia session after crypto exchange Binance announced plans to buy rival FTX in a bailout. A surge in withdrawals had left FTX struggling. FTX’s native token was in freefall yesterday and bitcoin lost 12 per cent. Bitcoin steadied at US$18,398.
