KUALA LUMPUR, Oct 26 — The ringgit is expected to see cautious trading next week, with investors closely following the developments related to the US Federal Open Market Committee (FOMC) meeting on Tuesday, dealers said.
FXTM market analyst Han Tan said the stage was set for the US dollar to grab the spotlight, with investors expecting a third consecutive 25-basis point cut to US interest rates.
He said markets were already looking ahead to the FOMC’s December policy decision and beyond, and should Federal Reserve (Fed) chair Jerome Powell signal a pause in easing, it could spur more US dollar strength.
“Investors will also be digesting the advanced reading on the US third-quarter gross domestic product (GDP) and also the October US non-farm payrolls data to ascertain the greenback’s next moves.
“Should the Fed signal a ‘hawkish cut’, it could send the ringgit towards the 4.20 level against the US dollar. Increased risk appetite or a pronounced decline in the US dollar could send the currency pair below the psychological 4.18 level, only to be met with stronger support at the 4.16 mark,” he told Bernama.
Meanwhile, OANDA’s Asia Pacific senior market analyst Jeffrey Halley is expecting the ringgit to trade in the range of 4.1700 to 4.1950 against the greenback in the middle term.
“However, this will depend on the US FOMC rate decision next week, where I think there is a 50/50 chance of an interest rate cut. A cut should be favourable for the ringgit to strengthen,” he said.
The local currency was traded mostly higher against a basket of other major currencies yesterday.
On a Friday-to-Friday basis, it fell against the Singapore dollar to 3.0692/0725 from 3.0644/0670 but improved to 3.8506/8548 vis-a-vis the yen from 3.8518/8553.
The ringgit appreciated versus the euro to 4.6502/6552 from 4.6571/6621 and gained against the pound to 5.3716/3768 from 5.3999/4042 previously. — Bernama