The local currency inches up to 4.0415/4.0500 as stronger-than-expected NFP data lift US rate hike expectations.
At 8am, the local currency inched up to 4.0415/4.0500 against the greenback from last Friday’s close of 4.0425/4.0465.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the higher-than-expected NFP suggests the US Federal Reserve (Fed) is likely to raise its benchmark interest rate at the upcoming Federal Open Market Committee (FOMC) meeting on Sept 15-16.
“The NFP came in at 162,000 in August, well above the consensus forecast of 55,000, while July’s figure was revised up to 21,000 from the initial estimate of 23,000.
“Labour force participation rate improved to 61.6% after experiencing a persistent drop since January this year,” he noted.
Afzanizam said Asian currencies may face a choppy trading session today, with the ringgit trading in a wider margin, potentially around 4.04 to 4.06 against the greenback.
“Currently, the market is watching the US consumer price index (CPI) on Friday. This is a critical data point as FOMC members will reconvene next week to deliberate their decision on the Fed Funds Rate, which currently stands at 3.50%-3.75%.
“The odds for a 25-basis-point hike have gone up, and that will shape the market sentiments this week,” he said.
Meanwhile, Quintex Intel global strategist Stephen Innes said the ringgit would trade relatively tight early in the week, but with a modestly positive bias.
He said the higher energy prices could still provide some support to Malaysia given that it remains a net energy exporter overall, largely through its significant liquefied natural gas surplus.
“More importantly from a structural perspective, Malaysia continues to strengthen its position in the regional artificial intelligence (AI) and semiconductor supply chain, spanning assembly and testing, advanced packaging and increasingly digital infrastructure.
“That gives the ringgit an additional medium-term support channel whenever global capital rotates toward the Asian AI investment theme,” he added.
The ringgit traded mostly higher against a basket of major currencies.
It appreciated versus the British pound to 5.4629/5.4744 from 5.4663/5.4717 at last Friday’s close, and edged up vis-a-vis the euro to 4.6934/4.7033 from 4.6962/4.7008, but it slipped against the Japanese yen to 2.5871/2.5927 from 2.5832/2.5860 previously.
However, the local note traded mostly lower against regional currencies.
It eased versus the Singapore dollar to 3.1893/3.1965 from 3.1888/3.1923 at the previous close and fell against the Thai baht to 12.2715/12.3033 from 12.2693/12.2863.
The ringgit was almost flat against the Philippine peso at 6.45/6.47 from 6.45/6.46, and little changed vis-a-vis the Indonesian rupiah to 229.0/229.6 from 229.1/229.4 previously. - FMT
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