The U.S. dollar ended lower for an eighth straight week as concerns over domestic growth and firm risk appetite weighed-in.
US reported a disappointing GDP figure last week, which showed lower than expected growth of 2.4% annualized rate in Q2. 2007's GDP was revised down from 2.1% to 1.9%, 2008 down from 0.4% to 0.0%, 2009 down from -2.4% to -2.6%. Peak-to-trough decline was revised down from -3.8% to -4.1%. These revisions showed a much deeper recession than originally reported and in turn indicated that the US economy has a deeper hold to dig itself out of.
The Dollar index slipped further to as low as 81.46 last week as the fall from 88.70 continued. The near term still clouded with bearish tone and 83.45 resistance level still intact. Support is at 80.04, which is close to 80 psychological level as well as 61.8% retracement at 79.73 to contain downside and bring rebound.
The overall bearish US dollar resulted in bullish ringgit. USD/MYR moved to as low as 3.1766 penetrating the last low of 21st June. The slide of the pair is within the downtrend line that started in 25th May.
The bullish ringgit against the US dollar is also reflected in bullish tone in local stock market despite bad news on the economic front-the deteriorating Foreign Direct Investments (FDI). FDI figures were hotly debated last week with the ruling government, BN flip-flopping the issues so much so that the ex-Finance Minister, Tengku Razaleigh insinuating that the International Trade and Industry Minister Mustapa Mohamed is not telling the truth about the reason for the deteriorating FDI.
As for the coming week, I am expecting the pair to test the previous low at 3.1701 with support at 3.166. Resistance is at 3.1930.
