The ringgit retreated against the US dollar today on technical correction after three consecutive days of gains amid mixed overnight greenback performance.
At 9.06am, the local note eased marginally to 4.7100/7150 against the US dollar from yesterday’s close of 4.6885/6950.
SPI Asset Management managing director Stephen Innes said after a significant ringgit rally yesterday, understandably, the local currency has pulled back versus the greenback ahead of the hotly anticipated US Consumer Price Index (CPI) later today.
He said the US dollar was choppy in its overnight performance, but the direction turned higher ahead of US CPI print as weaker China data sent growth fears reverberating through G-10 forex exchange markets.
He also believes that the ringgit was piggybacking the Thailand currency as the Thai baht was more robust with substantial foreign investment flows likely due to travel sector optimism.
This is an optimistic signal that money is coming back into the region, and will be challenging for neighbours to ignore as both currencies are sensitive to tourism flows.
“For today, however, excess risk-taking is likely to be pared back. I expect to see the ringgit rally materially ahead of the US CPI print,” he told Bernama.
The ringgit traded mostly lower against a basket of major currencies, except against the British pound, it was marginally higher at 5.3628/3685 from 5.3651/3725 on Wednesday.
It declined against the Singapore dollar to 3.3614/3655 from 3.3513/3562 previously and fell vis-a-vis the Japanese yen to 3.2225/2261 from 3.2159/2208 yesterday.
The local currency also slipped against the euro to 4.7227/7277 from 4.7101/7177 at yesterday’s close.
Meanwhile, the greenback surged overnight against its peers and held to those gains in early Asia trade, pushing the Japanese yen away from a roughly two-week high hit in the previous session. The yen last bought 146.28 per dollar.
The euro hobbled just above parity at $1.0016, some distance from its near-two-month high hit earlier in the week. Sterling last stood at $1.1360, after sliding 1.6% overnight
Investors now have their eyes on the closely watched U.S. inflation figures due later on Thursday, in which a strong price rise would likely reinforce the Federal Reserve’s aggressive campaign in tightening monetary policy.
Economists polled by Reuters expect the annual rise in the headline consumer price index to land at 8% for October.
“Up until yesterday … the market looked as though it was going to be positioned for a lower-than-expected data, which I thought was pretty dangerous, given that five of the last six months have produced upside surprises,” said Ray Attrill, head of FX strategy at National Australia Bank (NAB).
“I think that there’s every chance we’ll see a more extended correction in risk assets if we did see an upside surprise, because the market would be forced to price the Fed either higher, or higher for longer.”
The dollar has lost some steam over the past few weeks on hopes that the Fed could scale back on its hefty interest rate hikes as soon as December.
Against a basket of currencies, the U.S. dollar index was firm at 110.30, after rising nearly 0.8% overnight.
The risk-sensitive Aussie was last up 0.05% at $0.6434 while the kiwi gained 0.11% to $0.5890. Both had fallen over 1% overnight.
The greenback also received a leg up from a crypto fallout that soured risk sentiment and as U.S. stocks tumbled overnight, on results showing that Republican gains in the midterm elections appeared more modest than some expected.
In the latest turn of events in the crypto world, FTX Chief Executive Officer Sam Bankman-Fried told employees he was exploring all options for his firm after a stunning bailout deal with its rival exchange Binance collapsed on Wednesday.
Just a day earlier, crypto giant Binance had signed a nonbinding agreement to buy FTX’s non-U.S. unit to help cover a “liquidity crunch”.
“I do think there’s been a bit of contagion from what’s been going on in crypto to the broader markets …. It does seem to be having something of an unsettling effect,” said NAB’s Attrill.
FTX’s native token, FTT, was last 28.35% higher at $1.947, though its month-to-date loss is more than 90%.
Bitcoin rose 2% to $16,207, after falling to a two-year low of $15,632 in the previous session.
