The Dollar has been moving sideways against Ringgit for the past few days and is now trading at 4.2260. The market has remained undefined in recent days due to the possible reduction of financial stimuli by the Fed, which has already announced that it may have criteria for a tighter stance in relation to monetary policy at the next meeting. If the Fed adopts a more hawkish stance, it will mean less money to fund companies growth, stocks may fall, and the dollar is likely to appreciate even more against its counterparts. In the meantime, USDMYR may make a small pullback to the 4.1750 level before resuming its bullish trend. This week’s most important data is the Consumer Price Index for the Dollar, which may give a glimpse into US inflation.
Fed’s Vice President, Richard Clarida, recently said the US central bank may have criteria to raise the interest rate for the dollar before the end of 2022. The initial forecast was that the Fed would only raise the interest rate in September 2023. US unemployment data, released last Friday, brought the information that the US unemployment is falling down, and this has the potential to be positive for the dollar. Those macroeconomic data caused the dollar to rise sharply against the Chinese yuan and is now trading at 6.4900. If the USDCNH breaks above 6.5000, it could go up to 6.5800 in a few days. Investors will pay close attention to the Consumer price index, due later, as this number could bring vital information about inflation in the US and therefore, clues about Fed’s next steps.
