To stay defensive amid trade risks and ahead of key central banks’ decisions
Performance: As expected, the ringgit remained defensive within the 4.41–4.43/USD range this week. Focus has shifted from Europe to tariffs, the US recession narrative, and the Fed’s policy outlook.
Market Dynamics: Despite Fed Powell’s optimistic speech last Friday and escalating trade tensions, the USD index (DXY) remained weak, trading below 104.0. This was largely due to the US equity slump, scattered recession warnings, and optimism over a potential RussiaUkraine ceasefire. Interestingly, despite cooler-than-expected US CPI and PPI readings, the DXY regained some ground. Markets, however, remain hesitant to embrace the deflationary narrative until the impact of tariffs becomes clearer.
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