After a long bullish move, the Dollar has been sideways against Ringgit for the past few days, dominated by the sentiment of indecision and is now trading at 4.2235. Uncertainties regarding the Delta variant of Covid-19 led the Centres for Disease Control in the US to recommend vaccinated people to wear masks when in public. This uncertain scenario has caused concern among investors around the world. This Monday we had the ISM Manufacturing PMI for the month of July, which came in slightly lower than expected, which tends to be negative for the Dollar. On Friday the US unemployment data may give the market a clearer direction. From a technical point of view, there is a chance that the USDMYR will drop to 4,1750 before resuming the uptrend.
Since the Fed cut the US Dollar interest rate in March 2020, the Dollar has been on a strong downward trend against almost all of its counterparties. Now, since the beginning of this week, the Dollar has been sideways against the Chinese Yuan and is now trading at 6.4633. This lateralization movement can be explained by the market’s apprehension regarding the Delta variant and the US unemployment data that will come out on Friday. Regarding the unemployment, the market is starting to worry that the financial stimulus from the US is no longer enough to accelerate the economy as expected and it is possible that the Non-Farm Payroll this Friday will be lower than expected, the which may raise concerns about the Fed’s next steps with regard to the Quantitative Easing adopted so far. From a technical point of view, if the USDCNH breaks above the 6.5300 level, it could reach the 6.59 level in a few days.
