KUALA LUMPUR: The Malaysian ringgit continued to appreciate against the US dollar amid follow-through bargain hunting buying, riding on the recent news 1Malaysia Development Bhd had agreed to sell its entire energy assets to China General Nuclear Power Corp.
A sudden spike in crude oil prices on geopolitical concerns after Turkey shot down a Russian jet fighter along the Syrian border, further boosted the appetite for the local currency, which was pretty sensitive to the movement of the black commodity.
Light sweet crude traded on the New York Mercantile Exchange closed up US$1.12, or 2.7% to US$42.87 a barrel on Tuesday, off an intra-day high of US$43.46.
Though US posted some strong economic data, profit-taking activity in the greenback was apparent ahead of the holidays.
The ringgit firmed to as high as RM4.19 in early session, the best level in five weeks, versus RM4.242 at the closing bell the previous day.
Based on the daily chart, the greenback has violated the 14-day, 21-day and the 50-day simple moving averages (SMA) late last week and it is now in danger of slipping below the 100-day SMA line, resting at the RM4.1613.
The next support for the US dollar is resting at the RM4.0850, of which a clear breakdown from here would see the local currency sustaining the rally on persistent buying, targeting the RM3.9140 in the near-term, which is the 200-day simple moving average.
Technically, indicators are not looking very good for the greenback, meaning the Malaysian ringgit is poised to strengthen, with the daily moving average convergence/divergence histogram continuing to expand negatively against the daily signal line and apparently, in danger of falling below the zero thereshold. A sell signal was triggered a few days ago.
In addition, the daily slow-stochastoc momentum index and the 14-day relative strength index also are on the slide and they show no sign of curving up despite approaching the bottom.
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