Elevated oil prices and Fed caution to cap ringgit gains into mid-May
Performance: The MYR strengthened sharply to 3.91/USD from 3.97/USD last week, supported by stronger global risk appetite.
Market Dynamics: Optimism surrounding over a potential US-Iran agreement and improving confidence in safe passage through the Strait of Hormuz triggered a temporary unwind in USD safe-haven positioning, lifting EM currencies. However, elevated oil prices and rising inflation expectations continue to reinforce the Fed’s cautious stance. As a result, short-dated US yields remain supported, limiting downside for the USD despite improving risk sentiment.
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