The Dollar made a bullish move against the Ringgit this Wednesday after the release of the Consumer Price Index data, which brought inflation slightly below expectations and is now trading at 4.2380. Inflation data are crucial to understanding the development of the US economy, as this is one of the elements to be considered by the FED when deciding on its monetary policy. The forecast is that the US Central Bank will start to cut the financial stimulus in the next FOMC meeting. This change to a more hawkish stance could give even more strength to the dollar as investors will likely prefer to sell stocks to buy the T-bonds. If this scenario holds true, USDMYR may seek the 4.3000 level in a few days.
The Ringgit has been in a strong bearish trend against the Chinese Yuan since January 2020 and is now trading at 1.5251. The macroeconomic data from the Consumer Price Index, released on Monday for the Yuan, came in higher than expected and this made the Chinese currency gain even more strength against the Ringgit. The Consumer price index measures the change in the price of goods and services in the economy and therefore is one of the main ways to measure inflation. If inflation spikes up, then the Central Bank is likely to increase interest rates to control inflation and that creates buying pressure in a currency. The next most important support point is the 1.4500 region, where MYRCNH may encounter some buying pressure.
