KUALA LUMPUR: The ringgit is poised to extend its upward trajectory next week, supported by increasing market anticipation of an imminent interest rate cut by the United States.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the market expects an interest rate cut by the US, in line with the World Interest Rate Probability (WIRP) forecast.
The WIRP tool, used by traders, expects a 105.5 per cent probability for the US Federal Reserve (Fed) to cut the benchmark rate in September.
"The ringgit will likely remain around the RM4.64 and RM6.45 levels in the coming week, with the US economic data being a critical factor to monitor.
"At the moment, the current support level is located at RM4.6505. If the USD/MYR breaches this level, the next support level will be at RM4.6140," he told Bernama.
Mohd Afzanizam stressed that the US Purchasing Managers' Index (PMI) for manufacturing is expected to stay at 49.0 points in July, remaining below 50.
Additionally, the US Nonfarm Payroll (NFP) is predicted to drop to 175,000 in July from 206,000 in June, with the unemployment rate holding steady at 4.1 per cent.
"All in all, the interest rate cut is gaining further traction, in line with the WIRP forecast," he said.
During the past week, the exchange rate of the ringgit and the US dollar moved between a high of 4.6550/6605 on July 26 and a low of 4.6805/6835 on July 22.
On a Friday-to-Friday basis, the ringgit revisited the RM4.65 level, ending at 4.6550/6605 against the US dollar, compared to 4.6840/6875 a week ago.
Meanwhile, the ringgit was traded mostly higher against a basket of other major currencies.
The local note strengthened versus the euro to 5.0530/0590 from 5.0957/0995, higher against the British pound to 5.9901/9971 from 6.0452/0497 last Friday, but eased vis-a-vis the Japanese yen to 3.0176/0214 from 2.9760/9786 a week earlier.
The ringgit was traded higher against ASEAN currencies.
It improved against the Philippine peso to 7.97/7.99 compared with 8.03/8.04 a week earlier and rose versus the Indonesian rupiah to 285.5/286.0 from 289.3/289.7.
The ringgit appreciated vis-a-vis the Singapore dollar to 3.4641/4684 from 3.4833/4862 and went up versus the Thai baht to 12.9069/9268 from 12.9075/9221 last Friday.