Ringgit continues to retreat against greenback on profit-taking after recent gains
At 6 pm, the local note eased to 4.2420/2480 against the greenback from Thursday's close of 4.2340/2385.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said mixed signals from the US Federal Reserve (Fed) have also affected market sentiment, amid growing expectations for an interest rate cut. He noted that Fed officials remained divided on the timing and necessity for such a move.
'Some believe inflation could remain persistent, justifying the need to maintain a restrictive monetary policy. Others, however, feel that a rate cut should happen sooner to stabilise growth momentum,' he told Bernama.
Mohd Afzanizam also pointed out that the upcoming release of the US Consumer Price Index (CPI) data for July, scheduled for next Tuesday, is likely to intensify the debate among Fed members over the direction of interest rates. 'The consensus estimates have pegged the inflation rate at 2.8 per cent, which is higher than 2.7 per cent in the prior month. As such, we will continue to see debate among Fed members on the direction of interest rates,' he said.
At the close, the ringgit ended mostly higher against major currencies.
It edged up against the yen to 2.8720/8763 from 2.8732/8765 at the close on Thursday, and improved against the euro to 4.9381/9451 from 4.9411/9463. However, it dropped versus the British pound to 5.7034/7114 from 5.6596/6656.
The ringgit trended lower against regional peers.
It dropped against the Singapore dollar to 3.3014/3064 from 3.2973/3013, declined against the Thai baht to 13.1173/1419 from 13.0954/1146, and was lower against the Indonesian rupiah at 260.3/260.8 from 259.9/260.3 previously. It slipped against the Philippine peso to 7.43/7.44 from 7.42/7.44. — BERNAMA
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
2 hours ago
- The Star
The Bank of England has rarely been this split over price pressures
The Bank of England in London. — Reuters LONDON: Last week's interest-rate cut at the Bank of England (BoE) has been perhaps the most divisive yet under Andrew Bailey's governorship. Splits over how to squeeze out stubbornly high inflation have been common in recent years. However, last Thursday's vote saw the BoE's two most senior voices on monetary policy pitted against the governor – an eyebrow-raising divide at a crucial moment given inflation is predicted to hit 4% in September. Deputy governor Clare Lombardelli joined chief economist Huw Pill in opposing the narrow five to four vote to cut interest rates by a quarter-point. Lombardelli's dissent was highly unusual – the first from a deputy governor for monetary policy since Bailey took the helm of the central bank in early 2020 – and exposed deep fractures over how to tackle a fresh resurgence in price pressures. If the split persists, Bailey's vote alone will decide how quickly the BoE plows ahead with further easing. 'The bar for faster cuts has risen on the back of this and heightened divisions within the Monetary Policy Committee (MPC) may also call into question just how far the bank rate can go in the coming quarters,' said Sanjay Raja, chief British economist at Deutsche Bank. 'Internal disagreements are now boiling over.' Deutsche Bank's measure of voting division on the MPC shows discord has soared in recent years, peaking in 2023 and remaining elevated as rates have fallen, particularly when compared to the harmony in the post-financial crisis era when rates were held at close to zero. Bloomberg Economics' BoE Speak Index also shows a wedge emerging between Bailey and Lombardelli. Using Bloomberg News headlines, it shows Bailey's recent remarks have been more dovish than the BoE average and notably more so than Pill and Lombardelli whose comments have been more neutral. Last Thursday's meeting was the first ever that a second round of voting was needed to break the deadlock after no single course of action won a majority of MPC members. The vote split – economists had expected only two to oppose a reduction – saw the market odds of a cut in November drop below 50% as the once-a-quarter pace seen since last August was thrust into doubt. The divide reflects disagreements over whether the current spike in inflation will derail the BoE's progress in containing price pressures that first erupted after Russia's invasion of Ukraine sent energy prices soaring. But it also reveals Bailey's more relaxed approach to dissent. 'As the MPC approaches the end of its easing cycle, you'd expect there to be disagreement among policymakers about where rates should settle,' said Dan Hanson, chief British economist at Bloomberg Economics. 'What's unusual, at least when compared to the past decade or so, is there's a split right at the heart of the committee – between the governor and the deputy governor for monetary policy. The key point for investors is that Bailey's vote will likely tip the balance between a cut and hold.' The BoE's latest projections showed inflation will be hotter than previously predicted after a jump in food bills. While Bailey believes this resurgence is being driven by temporary factors, others on the committee fear it could spill over into more lasting 'second-round effects' on wages and prices. When asked about her views in the press conference following last Thursday's decision, Lombardelli declined to detail why she had voted against the governor, promising to lay out her reasoning in future and continuing her guarded approach to public comments since being appointed last year. However, she later pointed to the threat of food prices, which have 'a particularly salient role in inflation expectations'. Historically the governor and the deputy governor for monetary policy have moved in lockstep. Lombardelli's predecessor Ben Broadbent never dissented under Bailey or former governor Mark Carney. It was also unusual under Carney's predecessor Mervyn King, though he at times disagreed with deputy governor for monetary policy Charlie Bean on the size of quantitative easing. Bailey has been sanguine about the divisions exposed at recent meetings and is believed to encourage a culture of disagreement more than predecessors. He has frequently hailed the splits as evidence of a lack of 'groupthink' on the committee – an accusation that politicians have thrown at the central bank. It leaves the governor in a powerful position. Bailey is likely to be the key swing voter deciding tight votes at crucial meetings later this year. The November meeting will come just weeks after September's CPI release, which the BoE expects to show inflation at double the 2% target. It may also follow another tax-raising budget from Chancellor of the Exchequer Rachel Reeves, a fresh challenge for rate-setters who are still grappling with the inflationary impact of the hike in payroll levies that hit employers in April. — Bloomberg
The Star
2 hours ago
- The Star
Gold futures likely to track Comex ahead of American CPI data this week
KUALA LUMPUR: Gold futures on Bursa Malaysia Derivatives are set to take their cue from the US Comex gold market ahead of the upcoming release of the US consumer price index or CPI data for July, scheduled for tomorrow. The release is expected to intensify the debate among US Federal Reserve members over the direction of US interest rates in September. In a research note, RHB Research said gold futures will likely remain bullish this week, with analysts projecting a possible break above the US$3,450 per ounce resistance level, potentially pushing prices towards the US$3,500 per ounce mark. 'In a bullish market setup, resistance levels tend to be weaker. We expect immediate support to emerge at the US$3,350 per ounce level,' it said. The research house said traders are advised to retain long positions initiated at US$3,402.40 per troy ounce. 'To manage the downside risks, the stop-loss threshold is fixed at US$3,150 per ounce,' it added. On a weekly basis, the spot-month August contract increased to US$3,415.80 per ounce last Friday from US$3,310.40 a week earlier, the September contract improved to US$3,421.50 per ounce from US$3,316.30 previously, while October strengthened to US$3,451.50 per ounce from US$3,345.40, and November advanced to US$3,468.90 per ounce from US$3,362.80. — Bernama
The Star
2 hours ago
- The Star
US inflation data to test stocks this week
NEW YORK: A fresh look at inflation trends will test the US stock market's rally this week, with some investors saying equities are primed for a potential pullback after rocketing to records. The benchmark S&P 500 ended last Friday up more than 8% on the year and on the cusp of all-time high levels, while the tech-heavy Nasdaq Composite was at a record, as stocks rebounded from declines following a weak employment report earlier this month. Strategists at firms including Deutsche Bank and Morgan Stanley have recently said the market could be poised for some level of pullback after a largely unabated climb over the past four months, which has pushed valuations to historically expensive levels as a seasonally treacherous period for stocks begins. The monthly US consumer price index report, due tomorrow, could cause volatility. Data showing higher-than-expected inflation could undermine the growing expectation for impending interest rate cuts. 'I do think the market is set up for a bit of a pullback,' said Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth. 'There's a lot of concern bubbling underneath.' The S&P 500 has surged 28% since its low for the year in April, as investor fears about a tariff-induced recession calmed after President Donald Trump's 'Liberation Day' announcement earlier that month had set off extreme asset volatility. The index is trading at over 22 times its earnings estimates for the next year, well above its long-term average price-earnings ratio of 15.8 after recently reaching its highest valuation in over four years, according to LSEG Datastream. Investors are also wary of risks posed by the calendar. Over the past 35 years, August and September have ranked as the worst-performing months for the S&P 500, according to the Stock Trader's Almanac. The index has declined an average of 0.6% in August and 0.8% in September – the only months of negative average performance for the index during that time period. 'The combination of a softer payroll number with concerns of tariff-related inflation could be the recipe for a correction, especially in the seasonally weak third quarter,' Morgan Stanley equity strategist Michael Wilson said in a note last week. Still, Wilson said his 12-month outlook was bullish, adding 'we're buyers of pullbacks'. The consumer price index (CPI) for July is expected to have climbed 2.8% on an annual basis, according to a Reuters poll of economists. Investors will be watching to see if Trump's tariffs on imports are translating into higher prices after the June CPI report suggested levies were impacting the prices of some goods. Market bets on US Federal Reserve (Fed) rate cuts rose following the recent weak jobs data as investors expect the central bank will ease monetary policy to help shore up the labour market. Fed funds futures indicate an over 90% chance the Fed will cut at its next meeting in September, with at least two cuts priced in for this year, LSEG data showed. That narrative could be at risk if CPI rises more than expected, making the Fed more hesitant to cut rates, investors said. 'If the CPI suggests that the market got a little ahead of itself, that can create volatility,' said Angelo Kourkafas, senior investment strategist at Edward Jones. 'But if it's not worse than feared that can further reinforce that we are now in an inflection point for the Fed.' The prospect of higher tariffs and the economic fallout from those levies already instituted by the Trump administration has been a persistent theme clouding markets, but stocks have managed to rise to records despite the uncertainty. Higher tariffs on imports from dozens of countries took effect last Thursday, raising the average US import duty to its highest in a century, while the president also announced plans last week for levies on semiconductor chips and pharmaceutical imports. China could face a potential tariff increase tomorrow unless Trump approves an extension of a prior truce. The impact of higher tariffs on the economy could take a while to show up, and 'the market has kind of ignored the potential negative impact of this friction to the economy', said Matt Rowe, senior portfolio manager at Man Group. 'The market has gotten comfortable with tariffs being kind of a non-event, which I don't think is correct,' Rowe said. — Reuters
