This morning, the Malaysian Ringgit (RM) opened higher against the US dollar following the latest economic data in the United States strengthening investors' hopes for a reduction in US interest rates next year.
At exactly 9am this morning, the ringgit was seen at the level of RM4.5955 compared to the dollar from yesterday's closing value of RM4.6055.
According to SPI Asset Managing Director, Stephen Innes said weak economic data in the United States including a higher than expected unemployment rate and disappointing home sales data will continue to have a negative impact on the value of the US dollar.
He also said that the main issue in the foreign exchange market is that investors are now pricing in a potential interest rate cut of 150 basis points which is expected to happen in March next year.
However, the Federal Reserve (Fed) indicated a forecast of a cut of 75 basis points starting in the second half of next year. However, the first US Non-Farm Payrolls report data in early January will give some support to market forecasts.
A strong jobs report could delay interest rate cuts by the Fed. A weak report will strengthen expectations of an interest rate cut in March and lead to a significant weakening of the US dollar.
Meanwhile, the local currency is seen to open higher compared to several major world currencies such as the Japanese yen, the euro and even the British pound compared to yesterday.
The ringgit is also seen as strong against several other Asean currencies such as the Singapore dollar, the Indonesian rupiah, the Thai baht and the Philippine peso.
