MYR/AUD Outlook:
Bearish, as the rate is below its recent average and near recent lows, facing pressure from interest rate dynamics.
Key drivers:
• Rate gap: The Reserve Bank of Australia's recent rate hike supports the AUD, while Malaysian rates remain stable, widening the interest rate differential favoring the AUD.
• Risk/commodities: Strong upward movements in oil prices could be beneficial for the MYR, but recent volatility may undermine its strength against a firmer AUD.
• One macro factor: With Malaysia's GDP growth remaining solid, increased domestic consumption could potentially lend some support to the MYR, though its impact remains limited.
Range:
The MYR/AUD is likely to drift within its recent range, possibly testing the lower extremes.
What could change it:
• Upside risk: A commitment from the Malaysian central bank to tighten monetary policy could boost the MYR.
• Downside risk: Continued strength in the AUD driven by further Australian rate hikes or positive economic data could lead to lower MYR/AUD levels.
