The USD/MYR currency pair settled above Friday’s low of 4.1240, its weakest level since October 1st 2024, as traders now saw a Federal Reserve rate cut in December as much less likely than before.
An increasing number of Fed officials have signaled reticence on further rate cuts due to inflation concerns and indications of relative stability in the US labor market.
The Federal Reserve lowered its federal funds rate target range by 25 basis points to 3.75%-4.00% at its October meeting. But, Fed Chair Jerome Powell had said that a December rate cut was not a foregone conclusion.
Markets are now pricing in about a 44% chance of a 25 basis point Fed rate cut in December, compared to a 67% chance a week earlier.
This has triggered a sell-off in US stocks and government bonds and a rush into safe-haven currencies.
Market players are also attempting to predict what US macro data will show when it is published after the US shutdown ends.
Meanwhile, Malaysia’s economy grew 5.2% year-on-year in Q3, final data showed, confirming the preliminary estimate. It picked up from a 4.4% growth in Q2 and has been the strongest economic expansion since Q3 of 2024.
Growth was driven by higher manufacturing production and a rebound in mining and quarrying.
The exotic Forex pair lost 1.03% for the week.
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