MYR/EUR Outlook:
Slightly positive, but likely to move sideways as the MYR trades above its recent average, although lacks a clear driver for significant movements.
Key drivers:
• Rate gap: The Malaysian central bank's interest rate policies have provided some strength to the MYR compared to the European Central Bank's steady rates.
• Risk/commodities: Oil prices are above their recent average, which could support the MYR through improved trade balances, while higher oil prices may put pressure on the EUR's export competitiveness.
• One macro factor: Malaysia's robust GDP growth indicates strong domestic consumption and export performance, which supports the MYR.
Range:
The MYR/EUR is likely to hold within its recent range as traders await clearer signals on both sides.
What could change it:
• Upside risk: A more aggressive monetary policy stance from the European Central Bank could weaken the EUR ahead of an expected slowdown in inflation.
• Downside risk: Any signs of economic weakness in Malaysia could lead to a weakening of the MYR against the EUR.
