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KUALA LUMPUR: The ringgit was up against the US dollar early Thursday, supported by better investor interest as the US Federal Reserve announced a neutral interest rate hike next year.
At 09:00 (0100 GMT), the ringgit stood at 4.1935 / 1975 against the US dollar from 4.1980 / 2020 on Wednesday.
A broker said the Fed's commentary, Jerome Powell, had appeased investors who were eagerly waiting to see if there would be a further rise in interest rates.
"For now, the market sentiment has improved, but the real momentum for emerging markets remains the G20 summit this weekend," he said, adding that trade tensions protracted between the United States and China had affected the trade of these countries.
Negotiations between President Donald Trump and President Xi Jinping are a clear element of the follow-up.
Meanwhile, the ringgit has traded down against other major currencies.
It fell against the Singapore dollar to 3.0525 / 0565 after Wednesday's close at 3.0464 / 0498, declined against the yen to 3.6921 / 6963 to 3.6902 / 6941 and was depreciated against to the euro at 4.7663 / 7713 via 4.7353 / 7403 on Wednesday
It also slid against the pound sterling at 5.3777 / 3833 vs. 5.3571 / 3626 on Wednesday. – Reuters
At the same time, AmBank Research said that after Fed Powell's dovish speech, it foresaw an improvement in appetite for risky assets, which should bode well for currencies emerging markets. .
"As a result, we expect the MYR to pick up speed, but we believe that gains will be limited due to unstable crude oil prices, with the focus on the upcoming G20 meeting where The focus will be on the debate on the trade war between the United States and China.
"On this note, we expect the ring to trade between our support levels of 4.1861 and 4.1921, while our resistance is stuck at 4.2020 and 4.2055," said AmBank Research.
On Wednesday, the dollar weakened by 0.6% to 96.786 against the US dollar after Fed Powell's dovish monetary policy remarks, fueling speculation that the pace of rate hike in 2019 would be more slow.
AmBank Research took into account one or two rate hikes in 2019, in which the Fed would remain between 2.75% and 3.00%, a level below its neutral rate of 3.50%.
"However, we expect the Fed to raise rates at the next FOMC meeting," he said.
On Wednesday, the pound and the euro rose 0.61% to 1.283 and 0.68% to 1.137, respectively against the weaker dollar.
Despite the strengthening of currencies, the focus will be on the forthcoming Brexit decision and the ECB meeting, which will provide forward guidance. The yen rose 0.10 percent to 113.680, while the Chinese yuan slid 0.03 percent to 6.954 against the US dollar.
Regarding the ringgit, the local unit fell Wednesday from 0.30% to 4.201 against the greenback. KLCI increased slightly from 0.09% to 1,686.6.
At the same time, the 3-year, 5-year and 7-year moving average remained unchanged at 3.705%, 3.885% and 4.070%, while the 10-year moving average rose 1.0 basis point to 4, 60%.
In the commodities sector, oil prices fell further after rising US stocks for the tenth consecutive week due to worries over global oversupply.
Brent finished down to 58.76 USD / barrel, while WTI dropped 2.46% to 50.29 USD / barrel.
AmBank Research has highlighted the weakened ringgit compared to its peers in the region. It eased 0.69% to 7.834 against the Thai baht, marking its biggest drop this month. It also slid 0.21% to 3458.5 against the rupee and 0.32% to 12.50 against the peso. Against the OMS, it was 0.01% lower at 3.046.
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