USDMYR Technical Analysis

In a day full of macroeconomic news, the US Dollar resumes its downward movement against the Ringgit and is now trading at 4.3110. Earlier the Bank of Japan (BOJ) announced its interest rate decision, keeping it at -0.1% per annum. This only reinforced the BOJ’s stance on maintaining a monetary policy that goes in the opposite direction to that adopted by other major banks around the world, which have opted to increase interest rates to control inflation. Data from the Consumer Price Index (CPI) for the GBP brought a reading in line with expectations (10.5%). The CPI measures the variation in the price of goods and services consumed within the economy and is therefore a way of measuring inflation. It is worth noting that this is the highest inflation the UK has experienced in recent years. Eurozone CPI showed inflation at 9.2%. US Producer Price Index (PPI) data showed a reading of 6.2%. The PPI measures the variation in the price of goods and services used by companies to produce their products and is therefore a measure of inflation at the beginning of the production chain. Just to compare, Malaysia’s latest inflation reading was 4%, making it a desirable place to direct foreign investments. US retail sales came in at -1.1%, showing that the effects of the Federal Reserve’s (FED’s) restrictive monetary policy reached the final consumer. All this makes Malaysian stocks and companies a good destination for international investment, and this has caused the MYR to appreciate in the short term. From a technical point of view the USDMYR could drop as low as the 4.2450 region over the next few days, where it should find temporary support.