Hopes fade for the ringgit as US reports higher employment

 

KUALA LUMPUR: Any hope that the US Federal Reserve will cut interest rates, a move that can give the ringgit some breather, seems to have faded.

The just released Automatic Data Processing (ADP) employment change report shows that the US labour markets are still resilient: a total of 164,000 new jobs were created in the private sector in December against market expectation of 115,000.

Over and above that, the the initial jobless claims fell to 202,000 last week from 220,000 previously.

The poor sentiment, hamstrung by the expectation that the higher-for-longer rate narratives are likely to prevail, saw the ringgit extend its decline.

The ringgit began the day at 4.6420/4.6480 against the US dollar, down from yesterday’s close of 4.6330/4.6370.

This data subsequently boosted the two and 10-year US Treasury which saw yields rise six and eight basis points to close at 4.38% and 4% respectively.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said this meant that the ringgit could remain in a narrow range versus the greenback — between RM4.63 and RM4.64.

“Market participants would want to wait for the latest non-farm payroll and the unemployment rate report tonight,” he told Bernama.

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

It improved vis-a-vis the British pound to 5.8907/5.8983 from 5.8964/5.9015 yesterday and appreciated against the Japanese yen to 3.2054/3.2097 from 3.2185/3.2215.

The local unit, however, slipped versus the euro to 5.0835/5.0900 from 5.0634/5.0694 yesterday.

The ringgit was traded mostly lower against Asean currencies.

It fell against the Singapore dollar to 3.4921/3.4968 from 3.4903/3.4936 at the yesterday’s close and depreciated vis-à-vis the Philippine peso to 8.36/8.37 from 8.33/8.34.

The local currency was lower versus the Indonesian rupiah at 299.6/300.1 from 299.0/299.4, but it rose against the Thai baht at 13.4236/13.4487 from 13.4500/13.4687. - FMT