The ringgit initially faced pressure from the robust US core PCE reading last week, denting hopes for a Fed rate cut. However, the decline in US job openings and Fed Chair Powell’s seemingly dovish tone following the FOMC meeting aided in boosting the ringgit, bringing it close to the 4.73 level as of Friday evening.
The 10-year UST yield retreated below the 4.60% mark after Powell suggested that a rate hike was unlikely, leading to a narrowing of the negative MGS- UST yield differential gap and benefiting the local currency.
Notably, the USD index fell close to the 105.0 level due to the lack of Fed hawkish conviction and the sharp appreciation of the yen. Anticipation of a weaker-than-expected US nonfarm payrolls report is bolstering risk sentiment and aiding the ringgit in trading below the 4.74/USD level, Powell noted that an “unexpected weakening in the labour market” could prompt rate cuts.
Furthermore, the ringgit’s trajectory towards the 4.72-4.73/USD level may be supported by solid domestic macroeconomic data expected next week and the BNM’s continued stance of maintaining the current monetary
