The ringgit closed higher at 4.0743 per dollar on Friday as bargain-hunting offset growing fears of another Federal Reserve hike. The local note strengthened to 4.0673 in morning trade before giving up some gains in the afternoon, Malay Mail reported.
The morning had set a firmer tone. The ringgit opened at 4.0810 against Thursday's close of 4.0840 and gained across most majors even as the Dollar Index rose 0.19% to 101.285 and the 30-year Treasury yield jumped eight basis points to 5.48%, a two-decade high, The Star reported.
Related reading: yen slides past 157 as BOJ hike splits board; Bursa closes lower as oil slide hits petrochemical stocks.
The Fed math keeps getting worse
Rate futures now price a 70.9% chance of an October hike and 80.6% for December, up from 55.4% and 77.6% last Monday, Bank Muamalat's Mohd Afzanizam told Bernama. The repricing follows a blistering data run: September manufacturing PMI at 57.0 and services at 58.7, jobless claims down to 197,000, and John Williams saying the Fed will likely need to hike again this year, BabyPips reported.
The 10-year Treasury at 5.17%, its highest since 2007, is the transmission belt. Every basis point higher widens the US-Malaysia rate gap and pulls carry money toward the dollar.
Ringgit's buffers are holding
Three things lean against the pressure. Bank Negara's 2.75% overnight rate still offers positive real carry against local inflation. Brent crude above $100 supports Malaysia's export receipts and the fiscal balance. And positioning is already short: after weeks near 4.10, any soft US print forces bears to cover, which is exactly what Friday's bargain-hunting looked like.
The crosses confirm selective strength. The ringgit gained against the euro to 4.6413, sterling to 5.3910, the Singapore dollar and the rupiah, while ceding ground to the yen, baht and peso.
Levels to watch
- 4.0673: Friday's intraday high, the first resistance for bulls to reclaim
- 4.08: the pivot zone where most of this week's trade has clustered
- 4.10: the ceiling; a daily close above opens the year's highs
- 101.30: Dollar Index three-month highs; a break higher drags USD/MYR with it
What to watch next
- US data deluge: PCE prices, GDP and nonfarm payrolls all land next week
- Fedspeak: any pushback against 70% October odds would sink the dollar fast
- Oil and Hormuz: crude above $100 helps the ringgit until it hurts global growth
- BNM: no meeting imminent, so US data drives the pair into October