USD/MYR: Large current account surplus to underpin the ringgit – MUFG

FXStreet Team FXStreet

The Malaysian ringgit recorded marginal gains against the dollar in 2020 as the USD/MYR dropped from 4.0900 to 4.0200.

Stronger economic growth is expected in 2021 while a large current account surplus is set to continue to support the ringgit in the year ahead, according to economists at MUFG Bank.

Key quotes

“The government has secured vaccines to inoculate 20% of the population so far, with vaccination to begin in February. Funding has been set aside to procure vaccines for another 40% of the population.”

“Stronger economic recovery is expected in 2021 in part due to low base effects and spill-over effects of this year’s massive fiscal stimulus measures amounting 20% of GDP, with government projections at 6.5-7.5% from -4.5% in 2020. This lowers the need for BNM to ease in 2021, but risks of another rate cut cannot be dismissed should growth underwhelm. This is particularly in view of the difficulty in containing the third wave of infections.”

“The government expects the current account surplus to decline to MYR20.3 B in 2021 from MYR48.5 B in 2020. However, there are upside risks to this forecast as import demand may remain soft in the coming months amid restrictions enforced in Kuala Lumpur and Selangor. This is in addition to a stronger recovery in external demand amid higher oil prices, which should lift the ringgit amid dollar weakness.”

Author

FXStreet Team

FXStreet

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.