Momentum intact but may face pullback as USD rebound risks build
Performance: The ringgit appreciated sharply this week, gaining nearly 3.0% to around 3.92-3.93/USD, its strongest level since April 2018. This performance far outpaced peers.
Market Dynamics: The USD weakened sharply this week, with the DXY sliding to around the 96.0 level as FX-specific forces eclipsed macro and rate signals. Suspected USDJPY intervention triggered a sharp rise in USD hedging and renewed speculative selling. Portfolio rebalancing into commodities and emerging market assets added pressure and reinforced debasement trades, seen in continued strength in gold and silver. A marginally firmer Fed tone failed to arrest the decline, underscoring the limited influence of short-term rates on FX at present.
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