Amidst GE15 Impasse, Ringgit Trends Upwards Against The Greenback

The ringgit has extended its positive run against the US dollar today (Nov 24), improving further to the 4.55 level on expectations of softer United States (US) inflation and less aggressive US Federal Reserve’s rate hikes, said an analyst.

At 9 am, the local note climbed 195 percentage in points (pips) to 4.5530/5600 against the greenback from Wednesday’s close of 4.5725/5775

SPI Asset Management managing director Stephen Innes said the steadier crude oil prices earlier this week have also provided support for the local note.

“The only thing holding the ringgit back from rallying higher is the rise in the COVID-19 cases in China,” he told Bernama.

Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said it is likely that the market would remain a little more quiet than usual until next week, due to the US Thanksgiving holiday.

“Next week’s most important macroeconomic event is the release of the US Non-Farm Payrolls data, which will offer more clues on the strength of the US economy,” he said.

Meanwhile, the ringgit was traded lower against a basket of major currencies.

The local note slid versus the Singapore dollar to 3.3074/3130 from 3.3053/3094 at Wednesday’s close and shrank against the euro to 4.7419/7492 from 4.7202/7254 previously.

It had also further depreciated versus the British pound to 5.4968/5053 from 5.4495/4555 and fell vis-a-vis the Japanese yen to 3.2715/2768 from 3.2344/2382 yesterday.

Dollar slips as risk sentiment improves after Fed minutes

Meanwhile, The U.S. dollar was broadly weaker on Thursday as investors, encouraged the prospect of a slower pace of interest rate hikes from the Federal Reserve, placed bets on riskier assets.

The eagerly awaited readout of the Nov. 1-2 Fed meeting showed officials were largely satisfied they could now move in smaller steps.

“I think now it is almost certain that we’ll see the FOMC slow its pace of tightening from December,” said Carol Kong, a currency strategist at the Commonwealth Bank of Australia (CBA).

The dollar index , which measures the greenback against six major peers, was down 0.066% at 105.830, after sliding 1% overnight.

This month, the Fed raised its key rate by three-quarters of a percentage point for the fourth straight time in an effort to tame stiflingly high inflation.

But slightly cooler-than-expected U.S. consumer price data has stoked hopes of a more moderate pace of hikes. Those hopes have seen the dollar index slide 5.1% in November, putting it on track for its worst monthly performance in 12 years.

Citi strategists said there is still substantial uncertainty around how high rates might climb, despite the consensus that rates will rise more slowly.

The minutes also showed an emerging debate within the Fed over the risks that rapid policy tightening could pose to economic growth and financial stability. At the same time, policymakers acknowledged there had been little demonstrable progress on inflation and that rates still needed to rise.

Data on Wednesday showed U.S. business activity contracted for a fifth straight month in November, with a measure of new orders dropping to its lowest level in 2-1/2 years as higher interest rates slowed demand, Reuters cited.

CBA’s Kong cautioned, however, that the markets are too optimistic about a possible imminent end to the tightening cycle and noted there was still heavy support for the U.S. dollar due to China’s zero-COVID polices.

Rising coronavirus cases have led Chinese cities to impose more curbs, increasing investor worries about the economy and putting a lid on risk appetite.

The Australian dollar rose 0.25% versus the greenback at $0.675, while the kiwi was 0.26% higher at $0.625.

The euro was up 0.23% at $1.0419, while sterling was last trading at $1.2083, up 0.26% on the day. The pound rose 1.4% overnight after preliminary British economic activity data beat expectations, though it still showed that a contraction was underway.

The Japanese yen strengthened 0.54% versus the greenback to 138.84 per dollar.

U.S. markets will be closed on Thursday for Thanksgiving and liquidity will likely be thinner than usual.

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