Ringgit likely to be traded in cautious mode against US dollar

KUALA LUMPUR: The ringgit is expected to be traded in a cautious mode against the US dollar as traders seek fresh leads from more significant economic data.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said market participants would digest major data, including the US data on the Producer Price Index, Consumer Price Index and Retail Sales, to build their conviction.

“The US Federal Reserve (Fed) officials lining up to share their views would include Vice-Chair Philip Jefferson and Federal Open Market Commi ee (FOMC) members Lore a Mester and Christopher Waller.

“I would say the ringgit would (be traded in a) cautious mode and could remain in a narrow range of 4.73 to 4.74,” he told Bernama.

He said market participants would also be looking at Malaysia’s first quarter of 2024 gross domestic product (GDP) on Friday.

“We are projecting GDP to grow at 4.0 per cent in the first three months of the year due to sustained domestic demand and improvement in global trade,” he added.

Meanwhile, SPI Asset Management managing director Stephen Innes said the US inflation data could potentially trigger a significant sell-off in the US dollar if it comes in cooler than expected.

“Conversely, if the data aligns with expectations, it could extend the current US dollar selloff,” he said.

Innes said the market seemed to be interpreting the mounting evidence of a weakening US economy as a sign that the Fed could turn increasingly dovish, possibly even pricing in a rate cut as early as July.

“While this outlook represents an extremely bearish view on the US dollar, it aligns with recent survey data and suggests that the US dollar is poised to weaken.

“Consequently, I anticipate that the ringgit will be traded with a stronger bias, assuming the US-China tensions do not escalate further.

“Speculatively, I think we could test 4.72, but conservatively, I would need to go 4.7350 to 4.7550,” he added.