MYR/EUR Outlook:
The MYR is currently trading above its 90-day average and near the upper end of its 3-month range, suggesting a slightly positive outlook. The stability of Malaysia's economic growth supports this trend.
Key drivers:
• Rate gap: The Bank Negara Malaysia maintains a stable policy rate, contrasting with the European Central Bank's accommodative stance, which is favorable for the MYR.
• Risk/commodities: Oil prices are at a 90-day high, well above average, which typically strengthens the MYR due to Malaysia's status as a significant oil producer.
• One macro factor: Malaysia's construction sector growth has shown resilience, boosting confidence in the MYR amidst global economic uncertainties.
Range:
The MYR is likely to drift within its recent 3-month range but may test the upper extremes if positive signals persist.
What could change it:
• Upside risk: A stronger-than-expected economic report from Malaysia could further bolster the MYR.
• Downside risk: Any escalation in geopolitical tensions affecting Europe may weaken the euro and impact the MYR’s relative strength.