The Ringgit (MYR) opened Friday’s trading session with a positive move when it recorded a strengthening against the United States Dollar (US). This was all due to the US employment data (NFP) for June which came out much lower than the market’s expectations yesterday.
At exactly 8:04 am, our local currency jumped to 4.0705/0805 against the US dollar, compared to yesterday’s closing level of 4.0780/0830.
The cool US labor report also reinforced expectations that the Federal Reserve (Fed) will have to take a more cautious (dovish) approach and not rush to raise interest rates this year.
Ringgit Investigative Surgery: It Has Entered the ‘Oversold’ Phase
Bank Muamalat Malaysia Bhd Chief Economist, Dr. Mohd Afzanizam Abdul Rashid, explained that the US Non-Farm Payrolls (NFP) data only recorded an increase of 57,000 jobs in June, far short of the market consensus forecast of 114,000 jobs. Economy
Not only that, the data for April and May were also revised downwards. This proves that the US labor market is no longer 'too hot' to justify the Fed's action to raise borrowing costs in the near future.
Technical View: Dr. Afzanizam added that from a technical chart perspective, the US dollar/ringgit (USD/MYR) pair is actually in the oversold phase. This means that the Ringgit has great potential to continue to rally (strengthen) in the near future. He predicted that USD/MYR will hover in the range of RM4.06 to RM4.07 throughout the day.
Ringgit ‘Tapau’ All Major & Regional Currencies
It’s not just the US Dollar that has been battered, the Ringgit also opened higher across all major currency boards early this morning:
Pound Sterling (GBP): Ringgit strengthened to 5.4296/4430 (previously 5.4401/4467).
Japanese Yen (JPY): Rises to 2.5214/5277 (previously 2.5295/5327).
Euro (EUR): Increases to 4.6497/6612 (previously 4.6526/6583).
At the Southeast Asian level, our local currency also showed a fairly solid performance:
Singapore Dollar (SGD): Strengthens to 3.1483/1563 (previously 3.1517/1558).
Thai Baht (THB): Up to 12.2384/2744.
Indonesian Rupiah (IDR): Strengthened to 226.2/226.8.
Philippine Peso (PHP): Slightly increased to 6.61/6.63.
The weakness of the US Dollar after last night's NFP clearly gives a lot of breathing room for the Ringgit to regain dominance. We expect this strengthening momentum of the Ringgit to continue until next week, especially with the lack of market liquidity from the US today in conjunction with their public holiday. The target to see USD/MYR break below RM4.06 is now approaching!
