RINGGIT POISED TO TRADE HIGHER AGAINST US DOLLAR NEXT WEEK

AZLEE NOR MAHMUD

KUALA LUMPUR, Nov 30 (Bernama) -- The ringgit will likely rise and could bring the 4.145 support level into focus when and if a notable increase in risk appetite emerges next week as a result of encouraging progress in the US-China trade talks, said a dealer.

FXTM market analyst Han Tan said for the week ahead, further dollar strength or risk-off sentiment could lead the ringgit towards the 4.20 line, which has served as a key resistance level for the currency pair since September.

“A significant rise in risk appetite, potentially triggered by concrete positive developments in the US-China trade negotiations, could bring the 4.145 support level into focus, which is close to the currency pair’s 200-day moving average at present,” Tan told Bernama.

On the past week’s roundup, he said in a week when Asian currencies endured mixed fortunes against the US dollar, the ringgit threatened to make a run for the 4.19 mark after breaching above its 50-day moving average, before moderating in the second half of the week.

“The ringgit has now marked three consecutive months of gains against the US dollar.

“This week’s market action once again underscores the influence that the ongoing US-China trade negotiations have over global risk appetite, as investors continue to pin their hopes on a limited trade deal between the world’s two largest economies,” he said.

He said the slew of Purchasing Managers' Index (PMI) readings from around the world over the coming days would feed into the global economic assessment for the current quarter, even as investors continued hoping that the limited US-China trade deal would come to fruition soon in order to take some pressure off the global economy.

“As long as the optimism surrounding a US-China trade deal holds, any dismal economic data announcement may only inflict limited damage on global risk sentiment,” said Tan.

He said the US Dollar Index (DXY) had declined in the month of December for the past two years, and dollar bulls would be looking to Friday’s US non-farm payrolls data release in order to set the tone for DXY for the month ahead.

“A print higher than the forecast 190,000 jobs added in November should help boost US assets, while firming up expectations that the Federal Reserve will leave US interest rates unchanged through the first half of 2020,” said Tan.

The Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, looks likely to leave its supply cuts programme at current levels while awaiting the conclusion of the ongoing US-China trade talks, as the alliance of major oil producers gather in Vienna later this week.

“With OPEC having forecast that the global oil markets will tip into oversupplied conditions in the first half of 2020, oil’s upside appears capped for the time being, waiting to be triggered by a formalised ‘phase one’ US-China trade deal that should help clear up some of the demand-side uncertainties,” said Tan.

Malaysia’s economic calendar for the first week of December will feature a gauge of the country’s manufacturing sector in November, as well as October’s external trade figures.

While both sets of data expected to show contractions, they are seen to have a limited effect on the dollar versus the ringgit, which remains primarily swayed by external factors.

On a Friday-to-Friday basis, the local note slightly decreased to 4.1750/1780 from 4.1700/1750 recorded a week earlier.

The ringgit was higher against the Singapore dollar at 3.0550/0579 compared with 3.0590/0638 previously and vis-a-vis the yen to 3.8100/8138 from 3.8412/8469.

The local currency also appreciated versus the euro to 4.5938/5987 from 4.6116/6188 but slipped against the pound to 5.3807/3859 from 5.3672/3753.

-- BERNAMA