Ringgit heads for weekly gain as US$ pulls back

  • Economy
  • Friday, 07 Dec 2018

KUALA LUMPUR: The ringgit is set for its best week since March as the dollar retreats amid lower Treasury yields and oil prices stabilise.

The greenback fell by 0.1% to 4.1623 on Friday, taking its five-day decline to 0.5%.
Support 4.1312, 4.1227, 4.0900; resistance 4.2020, 4.2437, 4.2531

EM Asia forex will take its short-term cue from US jobs data, trade-war developments, equity markets and the outcome of a gathering between oil producers, says Christopher Wong, senior FX strategist at Maybank in Singapore.

“We believe Fed nearing the end of its rate-hike cycle warrants a sell USD on rally," he said.

Meanwhile, the arrest of Huawei CFO this week is a risk for EM FX as China may interpret the move as a political ploy.

Malaysia’s 10-year bond yield unchanged Friday at 4.07%, having dropped 7bps this week

Foreign holdings of Malaysian sovereign and corporate bonds and bills fell 2.7% in November to RM187bil, according to central bank data.

Forex reserves data for end-November due at 3pm local time; no forecast, holdings rose 0.4% to $102.1b in the first two weeks of November

Singapore advises its citizens to defer all non-essential travel to Kuala Lumpur in light of reports of planned rallies in the capital and the vicinity on Saturday. - Bloomberg

AmBank Research said though Opec has agreed in principle to cut production, in line with its fear, the cartel delayed a decision on specific quotas until it consults Russia. 

It is a big disappointment and gives the appearance of disarray within the cartel — and disunity more than unity, it said.

"This should see oil price depress in the near term. Opec members are expected to resume talks at 8am GMT (4pm local time), and again at 11am GMT (7pm local time) with non-Opec members. 

"On that note, we expect the ringgit to trade between our support level of 4.1515 and 4.1572 while our resistance is pinned at 4.1684 and 4.1770," it said. 

AmBank Research said the bloodbath in risk assets in the global markets have brought some concerns to global outlook with key stock indexes in EMEA i.e. Euro Stoxx 50, FTSE 100, CAC40, and DAX, falling more than 3.0% overnight while the UST10-year falling below the 2.90% handle. 

"We believe markets will continue to stay risk averse with looming uncertainty on global growth. Nonetheless the key focus for the day would be Fed Powell speech at about 7.45a.m. local time, and US November labour market data with November unemployment rate surveyed at 3.7% (prev: 3.7%) while wages is expected to hit 3.1% y/y (prev: 3.1%)," it said.

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