The ringgit continued its weekly gains for the fourth consecutive time, appreciating by almost 2.0% against the USD, primarily driven by the sharp depreciation of the USD index (DXY) on dovish Fed’s Powell speech. To note, the DXY fell to as low as 104.7 on 1 Dec, while the 10-year US Treasury yield retreated to around the 3.50% level. Kenanga said the local note was also supported by a stronger yuan (below 7.10 per USD) amid China’s reopening optimism.
The lower-than-expected reading in core PCE prices of 0.2% MoM (consensus: 0.3%; Sep: 0.5%) solidified the prospect of a
slower Fed rate hike in December, weakening the USD. This, coupled with China’s relaxation of its stringent COVID-19
measures may provide a fillip for the ringgit. However, the ringgit’s upside remains limited and the local note may hover around the 4.38 – 4.44 level due to continued uncertainties.
The USDMYR pair’s outlook is partially bullish for next week, with the pair expected to hover around its 5-day EMA of 4.443 as the pair’s RSI continues to be in an oversold position. Technically, MYR is expected to trade lower against the USD this week, with the pair’s immediate resistance level at 4.475, followed by 4.544.
Nonetheless, a move towards 4.372 will reaffirm the ringgit’s strength.
