Ringgit drifts lower against US$ in anticipation of US GDP data

  • Business
  • Monday, 22 Jul 2019

KUALA LUMPUR: The ringgit opened slightly lower against the US dollar today as investors waited on a widely expected US rate cut to give a clear lead.

At 9.05am, the ringgit stood at 4.1120/1170 against the US dollar from Friday’s close of 4.1100/1130.

A dealer said market players are cautiously waiting for the US second quarter gross domestic product data to be released at the end of the week, which plays a crucial role for the Federal Reserve as it looks to potentially cut rates. 

In addition, rising tensions in the Middle East weighed on sentiment in the local market.

Locally, he said the June consumer price index (CPI) will also be released soon and expected to tick higher, despite overall headline inflation for the year likely to remain manageable.

In May, the CPI grew 0.2 per cent over the same month last year, led by a price hike in the housing, water, electricity, gas and other fuels group.

Overall, the ringgit was mainly traded mostly higher against a basket of major currencies.

It rose against the Singapore dollar to 3.0202/0243 from Friday's close of 3.0236/0269 and strengthened against the yen to 3.8085/8142 from 3.8165/8207.

The local currency was also better versus the British pound at 5.1408/1475 from 5.1474/1519, and increased against the euro to 4.6091/6152 from 4.6184/6234. - Bernama

Ambank research expects major investors to move to the sidelines ahead of the European Central Bank's (ECB) and US Federal Reserve's respective policy meetings later this week.

While it expects the ECB to implement a 10bps rate cut from the current -0.4%, it said expectations of a 50bps rate cut by the Fed has dropped following its recent statement that it will cut rates by 25bps and continue cuts later in the year as needed.

"If there is volatility, then it will likely remain centered around whether the Fed cuts 25 or 50 bps. 

"We are of the view that the Fed must take the aggressive route because policymakers will have to convince market that they are truly serious about providing the firepower needed to continue
the current 10-year economic expansion," said Ambank.

For Monday, the research house expects the ringgit to trade between its support level of 4.0993 and 4.1054 while its resistance is pegged at 4.1223 and 4.1279.

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