Ringgit closes higher ahead of key US economic data

 Investors await the release of the US institute for supply management services index later tonight, says analyst.

KUALA LUMPUR:

The ringgit closed marginally higher against the US dollar today despite investors’ cautious stance ahead of key US economic data, including this week’s non-farm payrolls (NFP) report, which could offer further clues on the US Federal Reserve’s (Fed) monetary policy path, an analyst said.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US Dollar Index (DXY) rose 0.03% to 99.883 points as investors awaited the release of the US institute for supply management (ISM) services index later tonight.

He said consensus estimates point to the ISM services index coming in at 54.5 for July.

“Earlier, the ISM Manufacturing Index came in stronger than expected, suggesting that business sentiment in the manufacturing sector remained resilient,” he told Bernama.

Looking ahead, Afzanizam said investors would focus on the US NFP report due on Friday, with consensus estimates indicating that the US economy added 88,000 jobs in July compared with 57,000 in June.

“The unemployment rate is expected to remain unchanged at 4.2%,” he said.

Meanwhile, he said that market volatility has also increased as the new US Fed chair, Kevin Warsh, has been less inclined to provide forward guidance on monetary policy.

“Without clear forward-looking signals from the US Fed, investors are relying more heavily on incoming economic data to formulate their trading strategies, which has contributed to heightened market uncertainty,” Afzanizam said.

At 6pm, the local currency edged up to 4.0920/4.0960 versus the greenback from yesterday’s close of 4.0945/4.0985.

Meanwhile, the ringgit traded lower against a basket of major currencies at the close.

It declined versus the Japanese yen to 2.5940/2.5967 from 2.5929/2.5956 at yesterday’s close, weakened against the euro to 4.7222/4.7268 from 4.7120/4.7166 yesterday and slipped versus the British pound to 5.5107/5.5161 from 5.5034/5.5088 previously.

The ringgit was lower against regional currencies as well.

It weakened versus the Singapore dollar to 3.1916/3.1950 from 3.1899/3.1932 yesterday and depreciated against the Thai baht to 12.3216/12.3381 from 12.2487/12.2654.

The local currency also eased against the Indonesian rupiah to 228.1/228.5 from 227.1/227.4 at the previous close and slid versus the Philippine peso to 6.73/6.74 from 6.69/6.70. - FMT