This week the US Dollar has fallen 0.54% against the Ringgit within an increasing risk appetite coming from the US economy, which has been showing good numbers of economic recovery. On June 1st, the ISM PMI showed a better-than-expected number, which would normally be good for the Dollar, but the Ringgit performed better. On June 3, the ADP Nonfarm Employment Change and the Initial Jobless Claims also showed a better-than-expected number, but again the Ringgit performed better. On Friday we will have the Employment Rate and the Non-Farm Payroll for the US. Those indicators will give a clearer direction for the USDMYR next week. Should the unemployment rate for the US come lower than the forecast, it could mean a temporary rise in the USDMYR.
So the question is: “If the numbers have been good for the Dollar, then why did the USDMYR fall”? In fact, the Ringgit has been performing well this week, but not only against the Dollar, but against all its counterparts and this is happening due to the acceleration in the rollout of vaccination in the country. Also the number and the 7-day-moving-average of new infections are beginning to flat, which brings hope for the full reopening of the economy in the next few days. A phenomenon that happened in the UK and US (both countries with large amounts of vaccinated people) is that once the economy fully reopens, it activates the market with full speed and demand tends to grow really quickly. Should the virus be restrained in Malaysia, it could be the reality in some weeks. Should the scenario remain unchanged, the Ringgit could keep gaining ground against the US Dollar until it hits the 4.0950 in the next few days. Next week investors will be paying close attention to the US Core CPI for May, which will give a better look at the inflation in the United States.
