Bias: Bearish-to-range-bound, as the USD is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Federal Reserve's expected interest rate cuts might weaken the USD compared to the MYR, which is gaining due to Malaysia's economic resilience and expected GDP growth.
• Risk/commodities: Oil prices are currently above average, supporting the MYR due to Malaysia's strong exports of oil and commodities.
• One macro factor: Malaysia's widening trade surplus is enhancing investor confidence in the MYR, potentially leading to further appreciation.
Range: The USD/MYR is likely to drift within the recent range, influenced by shifting economic signals from both countries.
What could change it:
• Upside risk: A strong US economic report could boost demand for the USD.
• Downside risk: Continued interest rate cuts by the Fed could weaken the USD further against the MYR.