KUALA LUMPUR: The ringgit saw a significant slide on Monday as markets opened following the release of the Non-Farm Payrolls data, and two-year US yields surged nearly 20 basis points.
At 9.05 am, the ringgit stood at 4.7570/7620 versus the greenback compared with last Friday's close of 4.7155/7185.
SPI Asset Management managing director Stephen Innes said Friday's robust report on the US labour market sent shockwaves throughout the rates complex, sparking significant movements at the short end and providing substantial support for the US dollar.
Innes said the swift sell-off in two-year yields marked the year's most pronounced move thus far, nullifying the rally prompted by concerns surrounding regional banks earlier in the week.
"The implications for the US dollar were clear: Strength. Friday witnessed the greenback's second-largest rally of the year, which has already seen a 2.5 per cent increase in 2024.
"All in all, the ringgit was hammered lower at the open, where local investors can really poison the well today as there are many toxic elixirs to choose from today," he told the Business Times today. Furthermore, Innes said Federal Reserve Chair Jerome Powell just concluded a 60-minute TV interview on CBS where he really pushed back on market rate cut pricing, suggesting the Fed will only cut interest rates three times whereas market pricing was for between five and six.
"And this is really playing out negatively for the risk market, hurting Asia FX in general," he said.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid concurred saying that the sharp increase in the US Nonfarm Payroll (NFP) in January suggests that the US labour remained resilient despite having to contend with a higher interest rate environment.
He added that this would mean the possibility of a rate cut in March has been greatly reduced and it might occur at the later part of the year.
"So this has boosted the value of US dollar in the near term," he added.