Ringgit Could Bounce Back Next Week
The Malaysian Ringgit experienced a volatile week, initially weakening to nearly 4.30 per US Dollar following US strikes on Iran over the weekend, before recovering much of its ground as geopolitical tensions eased. The currency is now expected to trade within a range of 4.22-4.26/USD in the week ahead, with market attention shifting firmly back to US macroeconomic indicators.
While the Ringgit had been trading broadly stable in line with expectations, Monday saw markets unsettled by the geopolitical developments, pushing the currency close to the 4.30/USD mark. However, this initial risk-off sentiment dissipated swiftly.
The US Dollar Index (DXY) traded on a softer footing this week, ranging between 97.7 and 98.4, even amidst the initial geopolitical stir. Notably, investors turned towards Euro-denominated assets rather than the greenback, as the spike in oil prices proved short-lived. Risk appetite recovered significantly after President Donald Trump announced a ceasefire between Iran and Israel, helping to reverse much of the Ringgit's earlier weakness. A subsequent pullback in both oil prices and the DXY further reinforced this recovery, driven by increasingly dovish signals from the Federal Reserve.
Markets are now closely monitoring upcoming US economic data. The US core Personal Consumption Expenditures (PCE) reading, due tomorrow, is a key focus, with consensus expecting a 0.1% month-on-month increase. Attention will then shift to next week's crucial labor market data, where Non-Farm Payrolls (NFP) are anticipated to ease towards the 100.0k mark and the unemployment rate could potentially rise to 4.3%. June's manufacturing data will also be scrutinized for early signs of any tariff-related strain on the economy.
With geopolitical risks largely unwound, the focus is squarely returning to US macro data. Softer employment figures could reinforce expectations of a Federal Reserve rate cut as early as September, aligning with analysts' base case. Fiscal developments in the US may also take center stage, particularly President Trump's proposed 'big, beautiful bill,' which is expected to get a Senate vote by July 4th.
Technically, Kenanga Research said the USDMYR pair remains anchored around its 5-day Exponential Moving Average (EMA) at 4.24. Its direction in the coming week will largely hinge on incoming US macroeconomic data, with key support identified at 4.20 and resistance at 4.27. Related
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