KUALA LUMPUR, Dec 1 — The ringgit trading next week will be heavily influenced by the outcome of the much-awaited meeting between US President Trump and China’s President Xi Jinping on the sidelines of the G20 summit in Argentina.
FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said a breakthrough in the prolonged trade tensions would be the best outcome for the ringgit as an emerging market asset from this meeting today.
“A resolution to the trade tensions would be the best medicine that risk appetite and Asian markets can receive at this time. However, if the meeting does not conclude with a positive ending then we can expect risks of a renewed risk-off attitude from investors next week,” he said in a statement today.
He said a negative ending to the meeting could also mean that the trade tensions would continue into the next year.
“This remains as the most significant risk for the ringgit falling to 4.20 against the US dollar as a result of low buying attraction for emerging markets due to trade tension fears,” he said.
Oanda Head of Trading Asia Pacific Stephen Innes said the market would also be monitoring the development of a possible production cut agreement by the Organisation of the Petroleum Exporting Countries (Opec) and Russia next week.
He said with traders already pricing in a one million barrels per day, it would take a much deeper cut to jolt the market into a short covering rally.
“Otherwise, the market falls prey to the prevailing bearish sentiment that will continue to drive prices lower on the premise the reduction might not be sufficient enough to draw down surplus supplies,” he said.
For the week just ended, the ringgit closed mostly higher against the US dollar with the market sentiment moved by the US Federal Reserve senior officials’ comment on the interest rate hike direction.
On a Friday-to-Friday basis, the local note strengthened to 4.1820/1870 against the greenback from 4.1920/1960 in the previous week.
The ringgit also traded higher against a basket of major currencies.
The ringgit appreciated against the Singapore dollar to 3.0499/0546 from 3.0489/0530 and vis-a-vis the Japanese yen, it firmed to 3.6843/6903 from 3.7150/7189.
The local unit increased against the British pound to 5.3375/3443 from 5.3855/3927 and strengthened against the euro to 4.7545/7619 from 4.7680/7730. — Bernama
Source: The Malay Mail Online