According to the research house, Kenanga, the ringgit appreciated by more than 3.0% week on week against the US Dollar, mainly due to a sharp fall of the USD index amid Fed’s less hawkish narrative following the lower-than-expected US consumer and producer price index readings. The local note was also supported by solid domestic 3Q22 GDP reading of and a marginally stronger yuan due to an improvement in US-China relations.
It also noted, the ringgit may shed some gains today due to US’ better-than-expected retail sales reading and ahead of Malaysia’s 15th general election. Despite dwindling demand for USD, the DXY may continue to be supported around the 106.0 – 107.0 level due to rising geopolitical uncertainty, capping the ringgit to trade above the psychological 4.50 level. The direction of the local note for next week will be mainly influenced by the outcome of the general election. Any surprise result could prompt a knee-jerk sell-off and push the ringgit back to a weakening path above 4.60 against the USD.
The USDMYR pair’s outlook is bullish next week, with the pair expected to trade near its 5-day of 4.566.
From a technical standpoint, the ringgit could be at the cusp of reversing its gains and trade around the 4.579 level. Conversely, if the 4.526 level is broken, then the pair might attempt to move closer to the 4.508 level.
