KUALA LUMPUR, Aug 3 — The ringgit is expected to trend lower and test the 4.17-resistance level next week, no thanks to worsening trade disputes between the US and China which is fuelling more risk aversion among investors.
FXTM market analyst Han Tan, however, said the 4.13-mark may come into play if risk appetite enjoys a rebound in the week ahead.
According to him, US President Donald Trump’s latest threat to slap more tariffs on Chinese goods could maintain the risk-off mood at the start of the new week.
“Signs of potential retaliatory measures out of China in the near-term will hurt market sentiment further and dampen demand for risk assets, including the ringgit, amid heightened concerns over intensifying US-China tensions,” he told Bernama in an email recently.
Tan said the ringgit could also react to economic data releases out of the US and China, including the July US non-farm payrolls data released on Aug 2, as well as China’s July Manufacturing Purchasing Managers Index (PMI) and external trade figures due in the week ahead.
“Should global investors be fed with more signals that global growth is deteriorating further, that could spur more risk aversion,” he said.
On the domestic front, Malaysia’s June industrial production print which declined by 1.8 per cent year-on-year he said, was unlikely to have a major effect on the local unit’s performance in the week ahead.
“This is because extraneous factors continue to hold sway over Asian currencies,” he added.
For the holiday-shortened week, the ringgit traded lower against the US dollar as all eyes were on Federal Reserve’s interest rate cut decision, the US-China trade talks in Shanghai, as well as the crude oil price movements.
Early on Thursday, the Fed lowered its benchmark interest rate by a quarter-point to between two per cent and 2.25 per cent, the first reduction since the 2008 financial crisis.
Trump has also threatened to impose an additional 10 per cent tariffs on the remaining US$300 billion (RM1.2 trillion) worth of Chinese imports, effective September 1, 2019, after the two economic giants concluded their trade negotiations in Shanghai without any definitive deal.
The market was closed on Tuesday in conjunction with the installation of Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah as the country’s 16th Yang di-Pertuan Agong.
On a Friday-to-Friday basis, the ringgit was lower at 4.1550/1600 against the greenback compared with last Friday’s 4.1180/1210.
The local currency also traded lower against most other major currencies, except against the pound.
It depreciated against the Singapore dollar to 3.0168/0215 from 3.0091/0118 in the preceding Friday, weakened versus the yen to 3.8864/8922 from 3.7905/7936 and fell against the euro to 4.6104/6176 from 4.5879/5920.
Vis-a-vis the pound, the local note climbed to 5.0379/0457 from 5.1211/1265 previously. — Bernama
Source: The Malay Mail Online