KUALA LUMPUR: The ringgit is likely to trade within a narrow range of between 4.10 and 4.12 against the US dollar next week, provided that there is no escalation in the trade war between the United States (US) and China, said a dealer.
Vanguard Markets managing partner, Stephen Innes said this will also depend on the US Federal Reserve’s (Fed) actions and how they will drive the markets when the Federal Open Meeting Committee (FOMC) statement is released this month.
“My short-term views are turning a bit defensive as the US dollar near-term fortunes lie squarely on the Fed’s shoulders,” he told Bernama.
Innes said besides the FOMC meeting, traders will also keep a close watch on the Governing Council of the European Central Bank’s (ECB) monetary policy meeting on July 25, which may further strengthen the US dollar, with investors expecting a dovish or neutral statement from ECB.
He said he was expecting the ringgit to test the 4.10 level against the US dollar during the week, but the easier oil markets and stronger than expected US economic data kept the ringgit down.
Meanwhile, on the domestic front, FXTM market analyst Han Tan said Malaysia’s June consumer price index is expected to tick higher, although the overall headline inflation for the year should remain manageable.
He said with onshore risks contained, Bank Negara Malaysia (BNM) will continue monitoring the external downside risks in line with its accommodative policy stance.
“For the week ahead, the 4.09 mark is being eyed as the near-term support level for US dollar-ringgit, while the resistance line can be seen at its 100-day moving average around the 4.12 level,” said Tan.
For the week just ended, the ringgit was traded mostly lower against the US dollar on sentiments following the increased interest rate cut by the Fed, US-China trade disputes and movements in oil prices.
On a Friday-to-Friday basis, the ringgit was unchanged at 4.1100/1130 from 4.1110/1150 against the US dollar.
The local currency was traded mixed against most other major currencies.
The ringgit dropped against the Singapore dollar to 3.0236/0269 from 3.0217/0251 recorded in the preceding Friday and weakened versus the Japanese yen to 3.8165/8207 from 3.7910/7954.
It however improved against the British pound to 5.1474/1519 from 5.1511/1586 and increased vis-a-vis the euro to 4.6184/6234 from 4.6273/6323. — Bernama