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Malaysia: Ringgit slips against US$ as traders await clearer Fed signals
KUALA LUMPUR: The ringgit opened flat today against the US dollar as the greenback continued to gain traction ahead of a widely expected US and European Central Bank (ECB) interest rates cut.
At 9.05pm, the ringgit stood at 4.1180/1210 from Tuesday’s 4.1180/1190.
A dealer said the dollar was stronger against a basket of major currencies as investors awaited clearer signals on the Federal Reserve’s direction for interest rates.
“They are also looking forward to the ECB’s widely expected easing to be announced today, which is set to also pave the way for a US interest rates cut,” he added.
He said currency markets were also affected by the International Monetary Fund’s (IMF) global growth cut for this year to 3.2 per cent compared to 3.3 per cent set in April, stressing an urgent need to reduce trade and technology tensions.
IMF also slashed the target in the global volume of trade of good and services to 2.5 per cent in 2019.
Overall, the ringgit traded mixed against a basket of major currencies.
It was up against the Singapore dollar to 3.0146/0179 from 3.0177/0189 yesterday and advanced vis-a-vis the euro to 4.5903/5953 from 4.6023/6042.
It, however, declined against the yen to 3.8073/8104 from 3.8056/8079 and versus the British pound to 5.1224/1273 from 5.1220/1244. – Bernama
Ambank research highlighted that expectations over the upcoming US Fed rate cut and Boris Johnson’s elevation to the premiership of the UK will affect currency markets.
Reiterating that questions remain over whether the US central bank will cut its policy rate by 50bps, it said a 25bps had already been factored in for the most part.
Johnson’s nomination as president of the UK’s Conservative party and the country’s prime minister could also put pressure on the pound sterling.
Eurosceptic Johnson could pull Britain out of the EU on Oct 31 with a trade deal to appease hardline anti-EU members, said Ambank.
Meanwhile, the the European Cental Bank’s monetary easing is another key focus.
“We feel it is going to take a bold stroke by the ECB to both satisfy markets clamouring for incremental easing and make a difference to the economy, all the while remaining inside its institutional setting and not destabilising the financial system,” said the research house.
For today, it expects the ringgit to trade between its support level of 4.1052 and 4.1106 while its resistance is pinned at 4.1211 and 4.1253.
Source: https://www.thestar.com.my/business/business-news/2019/07/24/ringgit-slips-against-us$-as-traders-await-clearer-fed-signals/#bgGxybGQ0105LR1s.99