Hawkish FOMC signals and technical correction may push USDMYR back to 4.04-4.05
Performance: The ringgit strengthened this week, appreciating to below 4.04/USD on Thursday, its strongest level since Feb 2021.
Market Dynamics: The MYR drew support from a softer USD and BNM’s decision to keep policy unchanged. The USD index fell below 99.0, pressured by spillovers from heightened volatility in Japanese government bonds (JGBs) and concerns that European investors may reduce their holdings of US Treasuries (UST). Fresh fiscal giveaways proposed by Prime Minister Takaichi triggered a further sell-off in JGBs, amplifying global bond market jitters. Risk assets found additional support on Thursday after a framework agreement on Greenland led Trump to abandon plans for new tariffs on the EU.
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