The ringgit once again outperformed expectation, strengthening below the 4.40/USD mark. A cocktail of rising US growth concerns and waning confidence in the USD kept the DXY below 100.0.
Kenanga IB noted that the ringgit strengthened to 4.37/USD on Monday, as investors rotated into safe-haven alternatives amid growing unease over US assets. Trump's criticism of the Fed added to the USD's credibility crisis. Gains briefly eased to 4.39/USD on signs of US-China trade de-escalation but rebounded after Beijing denied any negotiations, contradicting Trump's claim.
Markets now eye a data-heavy week in the US, with1Q25 GDP (Consensus: 0.2% QoQ), core PCE (0.1% MoM), and ISM manufacturing (48.1). A downside surprise could boost expectations of monetary easing, with market now anticipating three rate cuts in 2025, further weakening the greenback. Markets will also monitor EU GDP for clues on the ECB's policy path, and the BoJ's rate decision for updated projections, especially as the EUR and JPY serve as growing safe-haven alternatives to the USD.
As for the outlook, the ringgit stands to gain further if expectations for Fed dovishness deepen. The USD's only meaningful upside would stem from tangible signs of a US-China trade thaw. The DXY remains highly sensitive to any signals of tariff de-escalation. The house is monitoring developments closely and may revise the ringgit outlook upwards should tensions abate materially.
The USDMYR pair remains in consolidation, trading near its 5-day EMA of 4.383. Market focus remains on trade rhetoric, with initial support at (S1) 4.367 and resistance
