The upcoming releases of economic data from Malaysia are less likely to have a major impact on the success of the local currency this week, with international factors set to start holding court over the ringgit-US dollar pair, FXTM said.
The government is set to release March industrial production data for the week ahead, followed by the first-quarter (Q1) gross domestic product (GDP) announcement. FXTM expects the March industrial output results to display an annual negative 2.5 per cent reading, while Q1 GDP was also projected to contract.
It said the better-than-anticipated March external trade data, along with the widely predicted 50 basis point decrease to Malaysia’s benchmark interest rate last week, did little to pull the ringgit away from the regional trend.
FXTM market analyst Han Tan stated that a time of great global economic uncertainty the fog of political uncertainty may further cloud the outlook of the ringgit. Tan noted that over recent weeks, the 4.30 mark has proven its value as a degree of support for the dollar-ringgit.
The currency pair bounced off psychological point to climb back above its 50-day moving average and retake last Friday’s 4.33 handle. The ringgit finished the day and the week as Asia’s worst-performer against the US dollar, given oil prices finding a surer footing over recent sessions.
Several events in the week ahead could cause changes in dollar and oil prices, two big drivers for the ringgit, he said on the global level. Considering the amount of US Federal Reserve spoken due in the days ahead, global investors were eyeing signs that US central bank was willing to explore negative interest rates.
Increasing expectations that the Federal Reserve will lower US interest rates, which are now close to zero, will weigh on the dollar and in effect ease pressure on emerging-market currencies. ‘Oil traders must track OPEC and the IEA’s monthly reports in improving their supply-demand dynamics outlook. Big oil movements could feed into the success of the ringgit once again, as they did in April.
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