KUALA LUMPUR: The ringgit continues its uptrend to open higher against the US dollar today as the greenback traded in a cautious mode ahead of the United States (US) nonfarm payrolls data (NFP) for August to be released later today, said an analyst.
At 9 am, the local note stood at 4.6310/6360 against the US dollar from 4.6365/6405 at Wednesday’s close
SPI Asset Management managing director Stephen Innes noted that the US dollar is currently trading strongly against the euro, while the ringgit is receiving relief from both the US rates channel and recent measures taken in China’s property sector.
He noted that China’s policymakers’ move to reduce mortgage rates to revive the republic’s beleaguered property sector had brought about positive sentiment to the market.
“These measures have led to the Chinese yuan and oil prices trading stronger, which is favourable for the ringgit. Meanwhile, the US 10-year yields are near a two-week low before the US NFP is released. This is also viewed positively for the ringgit this morning.
“However, with US NFP looming, it is possible that further gains beyond the opening flurry could be challenging ahead of the key jobs report,” he told Bernama.
Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid shared that the US core personal consumption expenditures (PCE) index, the favourite inflation gauge by the Federal Reserve (Fed), came in within consensus expectation of 4.2 per cent for July (June: 4.1 per cent) while the four-week moving average jobless claims is gradually rising to 237,500 last week from 237,250 in previous week.
“This suggests that the Fed might continue to maintain its restrictive stance in the upcoming meeting in September. Despite that, the ringgit versus the US dollar has been in oversold condition from the technical standpoint and it has been in such situation for quite sometime.
“The way we see it, data points have been somewhat mixed but leaning towards a weakening bias, implying the US monetary policy should be less restrictive going forward. In that sense, the ringgit could linger near its support level of RM4.6257,” he added.
Meanwhile, the ringgit also opened mostly higher against a basket of major currencies.
The local note increased versus the euro to 5.0186/0240 from 5.0482/0526 at Wednesday’s close, improved against the British pound to 5.8638/8701 from 5.8684/8735, but declined against the Japanese yen to 3.1813/1852 from 3.1679/1708.
At the same time, the ringgit traded mixed against other Asean currencies.
It gained against the Singapore dollar to 3.4261/4303 from 3.4278/4311 at Wednesday’s close, and was better against the Indonesian rupiah at 304.0/304.5 from 304.1/304.6 previously.
However, the local currency depreciated vis-a-vis the Thai baht to 13.2133/2329 from 13.2094/2268 on Wednesday and was also easier against the Philippine peso at 8.18/8.19 from 8.17/8.18.
The domestic market was closed yesterday for the National Day public holiday.
US dollar advances
The US dollar gained in late trading on Thursday, as the US Personal Consumption Expenditures (PCE) pushed back against weak data earlier this week, reported Xinhua.
The dollar index, which measures the greenback against six major peers, rose 0.44 per cent to 103.6126 in late trading.
Consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.8 per cent last month from June, the highest rate in half a year, according to the US Commerce Department on Thursday.
The PCE index showed that prices increased 0.2 per cent on a monthly basis and 3.3 per cent annually. The core PCE index, which excludes food and energy, showed prices increased 0.2 per cent from the month before and 4.2 per cent for the 12 months ended in July. That matched economists’ expectations.
Additionally, the number of Americans applying for jobless benefits fell by 4,000 to 228,000 the week ending Aug 26, the Labor Department reported Thursday. The four-week moving average of claims rose by 250 to 237,500.
“On balance, I would say today’s data is not too hot or cold. It offered few surprises and thus reinforced the notion of the Fed holding rates. Markets continue to almost fully price in no change at the next Fed meeting on Sept 20,” said Aaron Hill, an analyst at FP Markets.
In the eurozone, the EU measure of inflation also accelerated in August to 5.7 per cent from 5.1 per cent a month ago, official data showed on Thursday.
In late New York trading, the euro was down to US$1.0846 from US$1.0923 in the previous session, and the British pound decreased to US$1.2665 from US$1.2717.
The US dollar bought 145.4070 Japanese yen, lower than 146.1900 Japanese yen of the previous session. The US dollar was up to 0.8830 Swiss francs from 0.8783 Swiss francs, and it was down to 1.3514 Canadian dollars from 1.3528 Canadian dollars. The US dollar increased to 10.9402 Swedish krona from 10.8297 Swedish krona.
Short-terms rates remain stable
Short-term rates are expected to remain stable today on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system.
Liquidity is estimated at RM41.66 billion in the conventional system and RM16.08 billion in Islamic funds.
Today, the central bank will conduct two reverse repo tenders, comprising a RM1.5 billion tender for 31 days and a RM500 million tender for 91 days.
It will also conduct two Qard tenders comprising a RM400 million tender for seven days and a RM200 million tender for 14 days.
BNM also announced the availability of reverse repo, sale and buy-back agreements as well as collateralised commodity Murabahah facilities for tenors of one to three months.
At 4 pm, it will conduct up to RM43.7 billion conventional overnight tender and RM15.5 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6310/6360
100 yen 3.1813/1852
1 pound 5.8638/8701
1 euro 5.0186/0240
1 SGD 3.4261/4303
100 baht 13.2133/2329
1 mln rupiah 304.0/304.5
100 pesos 8.18/8.19
Gold up
The physical price of gold as at 9.30 am stood at RM280 per gramme, up two sen from RM279.98 at 5 pm Wednesday. – BERNAMA
