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KUALA LUMPUR – The ringgit is expected to trade range-bound next week as investors remained cautious ahead of the United States Federal Open Market Committee (FOMC) meeting, said an analyst.
SPI Asset Management managing director Stephen Innes believed investors were worried about the global economic outlook and that China’s reopening might not offset global recession concerns.
“In my view, the good news is that the US inflation expectations are falling, and next week’s consumer price index (CPI) could very well support that view if it comes out softer, which could accelerate the US dollar sell-off,” he said.
However, he said more positive follow-through is likely to be seen after the release of US CPI data and as the Federal Reserve downshifts to 50 basis points next week.
“This will likely support the ringgit to trade between the range of 4.3850 and 4.4150,” he said.
For the week just ended, the local note was traded mostly lower throughout the week due to growing concern on surging Omicron cases in China, worries about the global economic outlook, as well as caution ahead of the FOMC meeting next week.
On a week-on-week basis, the ringgit fell against the US dollar to 4.4010/4080 yesterday from 4.3835/3925 on the previous Friday.
The local note was traded mostly lower against a basket of major currencies.
It depreciated against the Singapore dollar to 3.2545/2601 from 3.2463/2535 from last Friday, lower against the euro at 4.6466/6540 from 4.6136/6231, and was weaker against the British pound at 5.3908/3994 from 5.3781/3892.
However, it was stronger vis-a-vis the Japanese yen to 3.2315/2369 from 3.2698/2768 a week before.
Meanwhile, Bursa Malaysia is likely to trend higher next week, with the key index to hover in the 1,470-1,500 range next week, said an analyst.
Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng said buying sentiment in the local bourse would likely continue next week as buying support from local institutions had been apparent in the week just ended, coupled with improving retail participation within the domestic market.
“(The local market) trended sideways for the week due to a lack of buying interests and selling of regional equities by foreign funds,” he said.
Yesterday, global equities rose on hopes that China’s easing of its anti-Covid-19 measures would help restore global supply chains and curb inflation.
The global equity market is also likely to be influenced by the outcome of the FOMC meeting on December 13 and 14, said Innes.
He said next week was all about the US CPI and what the US Federal Reserve’s signals for interest rates going forward after the hike of 50 basis points on Wednesday.
“On both counts based on current market-based inflation outlook, I do not think either will pose a problem for risk sentiment. But I’m turning more defensive on China after the big reopening bounce due to the expected surge in Covid-19 cases,” he said.
On a Friday-to-Friday basis, the key index eased 4.61 points to 1,477.19 from 1,481.80 yesterday
On the index board, the FBM Emas Index decreased 45.79 points to 10,607.41, the FBMT 100 Index fell 48.30 points to 10,308.85, the FBM 70 dipped 124.97 points to 12,946.22, the FBM Emas Shariah Index eased 89.74 points to 10,788.17, while the FBM ACE chalked up 151.61 points to 5,517.5.
Sector wise, the industrial products and services index ticked down 0.23 of-a-point to 181.59, the plantation index depreciated 79.97 points to 6,727.88, the financial services index widened 48.62 points to 16,495.04, and the energy index went down 22.21 points to 777.90.
Weekly turnover climbed to 18.68 billion units worth RM10.65 billion from 15.39 billion units worth RM12.23 billion in the previous week.
The main market volume went up to 11,73 billion shares valued at RM8.51 billion against last week’s 9.42 billion shares valued at RM10.67 billion.
Warrants volume increased to 1.77 billion units worth RM373.42 million from 1.44 billion units worth RM247.57 million previously.
The ACE Market volume expanded to 5.18 billion shares worth RM1.76 billion from 4.53 billion shares valued at RM1.31 billion on Friday a week ago. – Bernama, December 10, 2022