By Zarul Effendi Razali
KUALA LUMPUR, Nov 9 -- The ringgit is likely to continue trading in a cautious mode next week, driven by the mixed economic outlook on the domestic and global markets, as well as the US-China trade deal uncertainty.
FXTM market analyst Han Tan said developments surrounding US-China trade talks would continue being the primary driver of market sentiment, as global investors waited for the official signing of the “phase one” deal between the two economic giants.
“Although much of the optimism has already been baked into the markets, an official signing could still trigger more upside for Asian currencies,” he said.
On the local front, Tan said the upcoming Malaysia’s third-quarter gross domestic product (GDP) announcement was expected to be the main highlight among investors.
“A positive surprise above the market-expected 4.4 per cent print would help support the ringgit’s positive performance so far this month.
“The narrative surrounding Malaysia’s economic resilience is expected to be strengthened by Malaysia’s September industrial production announcement, considering that this economic indicator has posted on-year growth for every month since February 2013,” he added.
For the week just ended, he said that the local currency was Asia’s second-best performer against the US dollar, behind the Chinese yuan, with the US dollar-ringgit rate reaching its weakest level since end-July.
“The local currency drew support from the yuan’s gains, as Asian currencies rode on the tailwinds of risk-on sentiment. (On Tuesday,) Bank Negara Malaysia kept the overnight policy rate at 3.0 per cent, which supported the ringgit in its climb against the greenback this week,” he said.
Despite the negative surprise in Malaysia’s September export figures, Tan said the ringgit was still able to strengthen against the US dollar, demonstrating once again that the local currency remained primarily driven by external factors.
The ringgit ended the week sharply higher against the greenback at 4.1310/1360 against the previous week's 4.1640/1670.
The local currency was also traded firmer against a basket of other major currencies on Friday.
On a Friday-to-Friday basis, it rose against the Singapore dollar to 3.0377/0418 from 3.0649/0683 and strengthened vis-a-vis the yen to 3.7774/7830 from 3.8538/8569 last week.
The ringgit appreciated versus the euro to 4.5594/5666 from 4.6420/6470 and went up against the pound to 5.2906/2986 against 5.3915/3963 previously.
ZER ZER MHFD