USD/MYR Outlook: Bearish, as the rate is below its recent average and pressured by ongoing US monetary policy concerns.
Key drivers:
• Rate gap: The US Federal Reserve is expected to make rate cuts, which will narrow the interest rate differential with Malaysia and weaken the USD.
• Risk/commodities: The current high levels of oil prices support the MYR, enhancing Malaysia’s trade position and currency strength.
• One macro factor: The recent positive economic indicators from Malaysia, including expected growth from major trading partners, contribute to the ringgit's strength.
Range: The USD/MYR pair is likely to drift lower within its recent range, as pressures on the USD persist.
What could change it:
• Upside risk: A substantial shift in US economic data could reinforce USD strength.
• Downside risk: Escalating geopolitical tensions or further declines in US job performance could weigh on the USD.