KUALA LUMPUR: The ringgit is seen to trade between 4.23 and 4.25 against US dollar this week, as the rapid spread of the Delta variant cases across the globe may continue to unnerve the oil markets, dragging the Brent crude oil price lower.
Kenanga Research said the local currency also had the potential to test the 4.30 threshold as Prime Minister Tan Sri Muhyiddin Yassin reportedly expressed intention to step down when he appeared before the Yang di-Pertuan Agong Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah this morning.
"Despite Malaysia's above-consensus second quarter (Q2) 2021 gross domestic product (GDP) reading and more than 30 per cent of its population have been fully vaccinated, the ringgit weakened against the strengthening US dollar amid growing safe-haven demand.
"In addition to higher US dollar index, the ringgit struggled to retain its strength as domestic Covid-19 cases continued to climb above the 20.0k mark and Brent crude oil price continued to test the US$70 per barrel level.
"In addition, any pro-dollar signal from the release of the FOMC (The Federal Open Market Committee) minutes and July US retail sales data may put additional downward pressure on the local note," it said in a note today.
Kenanga Research said based on its five-day exponential moving average, the ringgit might bounce back by at least 0.11 per cent and trade at around 4.233.
"Technically, the US dollar trend might turn bearish this week if the US bond yields continue to drop, with an immediate support observed at 4.231 level.
"Conversely, if the 4.242 level is broken, then the US dollar/inggit pair could attempt to move higher and test the 4.247 level," it said.
Meanwhile, Rakuten Trade Sdn Bhd said the local bourse was expected to see some knee jerk reactions from reports that the prime minister might tender his resignation this morning.
"This may throw more uncertainties into the market over the immediate term as we reckon sellers to emerge," it said.
Rakuten said FBM KLCI was expected to potentially test the year's low of 1,490 points today.
"Though bargain hunting is expected to appear, we see the index to trend lower at around the 1,485-1,500 range today as sentiments becomes jittery," it said.