To remain defensive amid renewed USD demand on Middle East risk
Performance: As expected, the ringgit held steady early in the week but slipped past 4.26/USD on Thursday, weighed down by rising Middle East tensions and speculation over potential US involvement.
Market Dynamics: Geopolitical risk dominated market sentiment, with Brent climbing to USD78.9/barrel. While higher oil prices typically lift the USD, lingering concerns over US fiscal health has tempered greenback gains. This week, the USD was more responsive to geopolitical headlines than to macro indicators. Weaker-than expected US retail sales, the Fed’s increasingly stagflationary guidance, and foreign selling of US Treasuries had limited impact.
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