Hormuz de-escalation supports MYR, but Fed risk caps gains
Performance: MYR held broadly flat near 4.09/USD, as easing geopolitical risks offset lingering uncertainty over the Fed outlook.
Market Dynamics: Optimism over a potential Strait of Hormuz agreement lifted global risk sentiment and pushed Brent sharply lower, to an average of around USD81/bbl this week from above USD90/bbl last Friday. The ringgit nevertheless traded broadly flat near 4.09/USD, as the market continues to price a September Fed hike, a view we disagree with, as our base case is for an extended pause. This suggests US rate expectations, not energy prices, are now driving USD direction. Investors stayed cautious ahead of tonight’s US payrolls report, leaving USDMYR range bound.
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