KUALA LUMPUR, Sept 21 ― The ringgit is expected to trade weaker next week influenced by external factors including weaker regional currencies and a slowdown in China’s economy.
FXTM market analyst Han Tan said China’s release of its August industrial profits is expected to once again unveil the effects from the prolonged trade conflict between the US and China.
“Further evidence of a slowdown in the world’s second-largest economy could dampen risk sentiment further, while more Yuan weakness could weigh on Asian currencies,” he said in a statement today.
Investors he said would also be monitoring scheduled speeches by Federal Reserve officials as well as the incoming US economic data to help firm up their US monetary policy outlooks.
“Should markets get the perception that the US Federal Reserve is backing away from more US interest rate cuts, that is likely to push the US dollar higher while conversely putting downward pressure on Asian currencies,” he said.
He added that the ringgit immediate support level is set at RM4.20 followed by RM4.23 against the US dollar while the immediate resistance level is projected at RM4.16, around the 50- and 100-day moving averages, followed by RM4.14.
Axi Trader Asia-Pacific market strategist Stephen Innes said sentiment hasn’t improved since the US Federal Reserve’s rate cut announcement on Wednesday with traders taking their time to figure the directions of the Fed.
“After the deluge of central bank meeting over the past 36 hours, I don't sense the markets have gained more clarity coming out of these sessions than what they did going in.
He said policy uncertainty has never been particularly useful for risk and is possibly holding investor sentiment back.
“However, with no aggressive sell-off so far, I think it's safe to concede that investors are taking some comfort in the more relaxed US Federal Reserve policy,” he said.
For the week just ended, the local note was mostly lower throughout the holiday-shortened-week in line with the regional currencies amid a resilience US dollar despite the US Federal Reserve slashing the interest rate for the second time this year.
The ringgit ended the week lower at 4.1680/1720 against the greenback from 4.1630/1660 on the previous Friday.
The local currency traded mostly lower against most other major currencies, except the yen.
The ringgit strengthened against the Singapore dollar to 3.0297/0337 from 3.0318/0345 but declined vis-a-vis the Japanese yen to 3.8589/8637 from 3.8550/8581.
It weakened versus the British pound to 5.2196/2254 from 5.1829/1883 but increased against the euro to 4.6040/6101 from 4.6205/6255 previously.
The market was closed on Monday in conjunction with Malaysia Day. ― Bernama
