Kuala lumpur: The ringgit closed marginally higher against the US dollar today despite investors' cautious stance ahead of key US economic data, including this week's non-farm payrolls (NFP) report which could offer further clues on the US Federal Reserve's (Fed) monetary policy path, an analyst said. At 6 pm, the local currency edged up to 4.0920/0960 versus the greenback from Tuesday's close of 4.0945/0985.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that the US Dollar Index (DXY) rose slightly by 0.03 percent to 99.883 points as investors anticipated the release of the US Institute for Supply Management (ISM) Services Index later tonight. Consensus estimates suggest the ISM Services Index will come in at 54.5 for July.
'Earlier, the ISM Manufacturing Index came in stronger than expected, suggesting that business sentiment in the manufacturing sector remained resilient,' Dr. Mohd Afzanizam told Bernama. This robust performance in manufacturing is adding layers of complexity to the market's interpretation of economic conditions.
Looking forward, Dr. Mohd Afzanizam highlighted that investors would be focusing on the US NFP report due on Friday, with consensus estimates indicating that the US economy added 88,000 jobs in July compared to 57,000 in June. 'The unemployment rate is expected to remain unchanged at 4.2 percent,' he added, pointing out the critical indicators that could sway investor decisions.
Meanwhile, market volatility has increased as the new US Fed chair, Kevin Warsh, has shown less inclination to provide forward guidance on monetary policy. 'Without clear forward-looking signals from the US Fed, investors are relying more heavily on incoming economic data to formulate their trading strategies, which has contributed to heightened market uncertainty,' Dr. Mohd Afzanizam explained.
Despite its performance against the US dollar, the ringgit traded lower against a basket of major currencies at the close. It declined versus the Japanese yen, euro, and British pound, and weakened against regional currencies such as the Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso. This mixed performance underscores the complexities facing the local currency in a dynamic global economic environment.