USDMYR Technical Analysis

The US Dollar was up +0.22% against the Ringgit on Thursday and is now trading at 4.66. The move comes after the release of ADP Nonfarm Employment Change data for the month of June. Today’s reading came in much higher than expected (497k actual versus 228k forecast). As the ADP measures job creation in the US private sector, the market understood that today’s numbers could have an inflationary effect in the medium term. Another important element is that the ADP is seen as a preview of the Nonfarm Payroll to be released tomorrow. If the job market is heated in the US, more people will buy goods, products and services, putting pressure on the supply chain, which can lead to inflation. And the most common way to contain inflation is by raising interest rates. So today the market understood that job creation higher than expected could end up forcing the Federal Reserve (FED) to raise interest rates at the next meeting and that’s why the USD appreciates.