The USD/MYR currency pair held near a 5 1/2-week high of 3.9775 on Tuesday, with the greenback remaining well bid.
Despite a revival in optimism around a possible US-Iran peace agreement, investors remain cautious amid persistent disputes over Tehran’s nuclear program and issues surrounding the Strait of Hormuz.
US President Donald Trump recently canceled a planned military strike on Iran and commented that there was a good chance an Iran nuclear deal could be reached. The subdued market response to these remarks suggests lingering skepticism over a swift resolution to the Iran conflict. This ongoing uncertainty is likely to continue supporting the safe-haven appeal of the US Dollar.
In addition, firmer-than-anticipated US inflation readings have reinforced hawkish messaging from Federal Reserve officials. According to pricing in the fed funds futures market referenced by the CME FedWatch tool, traders see a 35.0% likelihood that the Federal Reserve will raise interest rates by 25 basis points by year-end.
Attention is now turning to the upcoming release of the Federal Open Market Committee minutes on Wednesday, which could provide further clarity on the Fed interest rate outlook.
Meanwhile, Malaysia’s annual inflation rate was reported at its highest level since October 2024 in April.
Annual headline inflation has accelerated to 1.9% in April from 1.7% in March, in line with market consensus.
Upward price pressure came from food & beverages (up 1.2% YoY), alcoholic beverages and tobacco (up 2.8% YoY), housing (up 1.1% YoY), transport (up 4.1% YoY), health (up 1.4% YoY), information and communication (up 2.0% YoY) and financial services (up 4.9% YoY).
Malaysia’s core inflation, which excludes fresh food and administered prices, has eased to 2.0% in April from 2.1% in March.
The USD/MYR currency pair was last up 0.03% on the day to trade at 3.9750.
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