Ringgit likely to trade on cautious mode next week

KUALA LUMPUR: The ringgit is expected to trade on a cautious note on the first trading week of 2019, as investors tussle with geopolitical risk factors weighing on global sentiment.

FXTM Research Analyst Lukman Otunuga said the ongoing US-China trade developments, Brexit-related uncertainty, heightened political risks in Europe, slowing global growth fears and concerns over a partial US government shutdown, were poised to fuel risk aversion.

“With investors seen avoiding riskier assets amid the unfavourable market conditions, safe-haven assets such as gold and the Japanese yen will be in high demand.

“Concerns over the US economy cooling in 2019 will continue threatening the greenback’s safe-haven status, while Brexit uncertainty is likely to limit any meaningful gains on the British pound,“ he told Bernama.

On the domestic front, investors will direct their attention towards the Producer Price Index report and M3 Money supply for November scheduled for release on Dec 31.

“There will be a strong focus on the Nikkei Purchasing Managers’ Index report on Jan 2, which should provide fresh insight into the health of Malaysia’s manufacturing sector in the final month of 2018.

“With the latest trade data scheduled for release later in the week on Jan 4, it will certainly be an eventful trading week for the ringgit,“ said Otunuga.

While the local currency has scope to appreciate amid positive domestic economic data, he noted that the ringgit outlook remained influenced by external factors, such as global trade developments and the US dollar’s performance.

The market will be closed on Tuesday for the New Year holiday.

For the week just ended, the ringgit closed mostly higher against the US dollar with market sentiment moved by oil prices and the partial US government shutdown.

On a Friday-to-Friday basis, the local note strengthened to 4.1500/1550 from 4.1790/1830 against the greenback.

It advanced against the Singapore dollar to 3.0336/0384 from 3.0490/0531 and improved against the British pound to 5.2468/2548 versus 5.2919/2986.

Against the euro, the ringgit jumped to 4.7488/7550 from 4.7758/7808, but eased versus the Japanese yen to 3.7597/7653 from 3.7588/7634. — Bernama