Softer US inflation hopes to reinforce MYR gains
Performance: MYR traded around our projected 4.07-4.09/USD range as fading Fed hike expectations tempered broad USD strength.
Market Dynamics: Softer US payroll growth reduced expectations for an imminent Fed rate hike. The ringgit strengthened as the USD surrendered part of its post-FOMC gains. Markets increasingly viewed the recent improvement in labour demand as insufficient to justify earlier Fed tightening, while Fed Chair Warsh refrained from validating aggressive market pricing. FX positioning became less supportive of the USD ahead of next week’s FOMC minutes.
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