Kuala Lumpur: The ringgit opened slightly higher against the US dollar today amidst tepid investor sentiment, as the US economic data came in slightly better than expected.
This has provided modest relief from US inflation pressures and propelled a risk-on mode in the financial markets, according to analysts.
AdvertisementAt 8am, the ringgit traded at 4.4950/4.5045 against the greenback versus 4.4970/4.5010 at yesterday’s close.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said inflation in the US, as measured by the change in the Consumer Price Index (CPI), came in within expectations at 2.9%, while the core CPI was lower than expected at 3.2% against consensus estimates of 3.3%.
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“Meanwhile, the 10-year US Treasury yield slid 14 basis points to 4.65%, and the US Dollar Index (DXY) dropped to 109.083 points,” he added.
Advertisement (adsbygoogle = window.adsbygoogle || []).push({});On that note, Afzanizam said the ringgit could perform better today and might continue to hover around RM4.48-RM4.49.
SPI Asset Management managing partner Stephen Innes noted that the US CPI data came in better than anticipated, registering a modest relief in inflation pressures, with a core print slightly below expectations.
Advertisement (adsbygoogle = window.adsbygoogle || []).push({});“This has given the treasuries market a brief moment to test lower yields. However, I’m sceptical that this bond relief rally will extend.
“A few small beats on inflation expectations are not enough to turn the tide, especially with the new administration poised to fuel the US economy to even hotter levels,” he said.
Innes noted that traders in the foreign exchange markets seized the momentary dollar dip to bolster their positions, anticipating more volatility as US inauguration day approached.
Meanwhile, the ringgit opened mixed against major currencies.
It strengthened versus the euro to 4.6276/4.6374 from yesterday’s close of 4.6364/4.6405, but fell vis-a-vis the Japanese yen to 2.8768/2.8831 from 2.8656/2.8685 and weakened against the British pound to 5.5023/5.5140 from Wednesday’s close of 5.4949/5.4998.
Similarly, the local note traded mixed against Asean currencies, advancing versus the Singapore dollar to 3.2897/3.2971 from 3.2909/3.2943 at Wednesday’s close, and was higher vis-a-vis the Indonesian rupiah at 275.3/276.0 from 275.4/275.8 recorded at yesterday’s closing.
However, it depreciated versus the Thai baht to 13.0022/13.0388 from 12.9503/12.9682 at yesterday’s close and traded flat against the Philippines’ peso at 7.67/7.69.