Ringgit Rallies Against Dollar on Weak US Data

The Malaysian ringgit strengthened against the US dollar on Thursday due to weaker-than-expected United States economic data. The local currency opened at 4.0905/0960, up from Wednesday's close of 4.0920/0960.

According to Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, the softer US economic data pushed the US Dollar Index (DXY) down 0.18 per cent to 99.676. The Automatic Data Processing (ADP) Nonfarm Employment Change came in at 44,000 in July, below the consensus estimate of 68,000 and down from 95,000 in June.

The US Institute for Supply Management (ISM) non-manufacturing index stood at 54.1 in July, below the consensus estimate of 54.5. Dr Mohd Afzanizam added that the potential reopening of the Strait of Hormuz has kept Brent crude prices below US$80 per barrel.

Quintex Intel global strategist Stephen Innes noted that risk sentiment had softened as investors awaited final details of a potential West Asia peace deal and the 48-hour window ahead of the US non-farm payrolls report. As such, the ringgit may remain confined to a relatively narrow trading range in the early hours.