Previous week announcement of improvement of the Malaysian econmy and Bank Negara raising the OPR has no bearing on the Ringgit this week.
USDMYR rose up for a five days and negated last week fall, and and posted its biggest weekly loss since 1998, as regional stocks slumped and traders pared bet on future appreciation of the Chinese Yuan.
The Ringgit slide was in line with other currencies in Asia, where currencies of Japan and Europe strengthened against the US dollar.
The Ringgit, Singapore Dollar and South Korean Won against the US Dollar-showing weakness since early of the week while the US Dollar Index reached the Top on Tuesday and went south for the next three days.
The Ringgit weakness took a cue from sentiment in the local equity market. The equity market as represented by FBM KLCI has been on the slide since last Friday with Ringgit moving in the same direction.
The chart below showed a comparison between FBM KLCI and EWM. EWM is an Exchange Traded Fund (ETF) that is meant to track the MSCI Malaysia Index, the iShare MSCI Malay sian Index Fund that is listed on New York stocK Exchange. As an index fund, EWM seeks to track the performance of an Bursa Malaysia index by holding in its portfolio either the contents of the index or a representativ e sample of the securities in the index.
We could see that FBM KLCI movement is precede by the New York Stock Market as represented by DJIA below.
The USDMYR has been on the move upward but the sentiment is still on the bearish side as the pair has not tested the 61.8% retracement at 3.3458. The coming week I expected the pair to test the 3.3458 and 200 EMA. Penetration at this level will be met with resistance at 50% retracement.
Failure to penetrate 3.3458 level will had a support at 3.300.
