Malaysian Burse was very bullish last week with the FBM KLCI staged an upside move from Monday opening at 1294.89 to Friday close at 1317.69 for a 17.6% rise. EWM tracked FBM KLCI’s upside move (see the above chart).
The Ringgit could only mustered an appreciation of 8.5% during the same period with open at 3.28 against the US Dollar on Monday and close at 3.253 on Friday.
The ringgit seem to be tracking traders’ favorite risk indicator- EUR/JPY which registered an appreciation of 7.8%.
The USD/MYR after penetrating the lower support line of ascending channel consolidated at 61.8% retracement of previous month swing high and low. The pair went to as low as 3.246 just above last week support at 3.244.
For the past two months, risk appetite was greatly affected by a near Greece default and the adaptation of unprecedented 750 billion euro rescue package. In the last two weeks, a positive turn in the euro suggested that conditions in the Club Med countries of Europe have actually improved; but there was rumour that Spain is on the verge of asking for its assistance aside from the European Financial stability. On Friday, it was reported by Reuters that the rumour was manufactured by German officials
US Dollar continuation of recent slide through the week ahead is certainly depend on the trajectory of the DJIA/S & P and broader risk appetite.
Technically, USD/MYR is on the downtrend as the pair move below the four moving averages and the MACD has recently cross over the centre line.
For the coming week , the first resistance is at 3.30 and the next higher resistance at 3.35. Immediate support is at 3.245 and a break below 3.231 could bring the pair to previous month low at 3.18 level.
