MYR: Ringgit Stuck in Tight Range

The AUD/USD has had a range of 0.6472 - 0.6495 in the Asia- Pac session, it is currently trading around 0.6490, -0.02%. US equities roared higher and the USD reverted back to type and got hammered lower on the market's interpretation that Powell’s speech was dovish. I have read some differing views and not sure the speech was as clear cut as the market would like it to be, as we know the market is clearly more comfortable selling USD’s but lets see if this move can follow through the first couple of days this week. The AUD found some solid demand towards 0.6400 and has bounced back into the middle of its recent multi-month range of 0.6350-0.6650.

• Analysts Split Over Where Cash Rate Expected To Trough: Bloomberg’s updated consensus forecasts show that the RBA is widely expected to be on hold in September and that there will be one final cut for the year in Q4, likely November as that coincides with the RBA’s revised outlook. The survey was taken over August 14-19, after the last RBA decision and updated forecast release. Forecasters are split over 2026 though and where rates will trough with most projecting either 3.35% with no moves in 2026 or 3.1% with one last cut early next year.
• One of the main outliers is Westpac, which expects another rate cut in Q2 2026 with the cash rate then stabilising at 2.85%. AMP is forecasting the same path.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6400(AUD621m), 0.6510(AUD520m), 0.6465(AUD349m). Upcoming Close Strikes : 0.6400(AUD621m Aug 26) - BBG
• CFTC Data last week shows Asset managers continue to add to their shorts -72904(Last -67449), the Leveraged community though again reduced their own shorts -7818(Last -10121).
• AUD/JPY - Asia-Pac range 95.31 - 95.63, Asia is trading around 95.55. The pair found some demand around 94.50 last week and has bounced from there, sellers should be around back towards 96.00 initially. This pair’s direction will be determined by the market's ability to follow on with this risk-on move or not.

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• The daily OMO has has injected over CNY1.3bn during the last week and to add to that today, the PBOC injected CNY600bm via it's 1-year medium-term facility and as well as adding to the 3 and 6-month outright reverse repos.  
• With so much issuance to come in the year ahead, the measures are likely aimed at ensuring the stability of the bond market to facilitate cost effective borrowing.  
• Over the last fortnight, the 10-year government bond yield has gone from 1.68% to 1.78%.  
• Bond futures are up in Monday morning trade with the 10-year leading.  
• At 107.86, the 10-year is up +0.20 for its biggest one day gain for August, yet remains below all major moving averages.  The nearest - the 20-day EMA - is at 108.16.
• The 2-year future is up +0.02 at 102.34 and it too is below all major moving averages.  The 20-day EMA is at 102.38.  
• Bonds are performing well today with the CGB10yr down -1.5bp at 1.77%

After rising strongly on Friday following suggestions the Fed may ease, gold prices have traded in a narrow range today. They reached $3371.31 early in today’s APAC session but then fell to $3359.87 and are currently down 0.2% to $3365.3/oz. Pressure is coming from a 0.1% rise in the BBDXY USD index and slightly higher Treasury yields.

• Fed Chair Powell said on Friday “with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance”. The US OIS market now has around an 88% chance of a 25bp rate cut on September 17 priced in and about 50% of another in October. Monetary easing is supportive of non-interest bearing gold.
• Silver rose to $39.001 earlier before falling to $38.764 and is currently down 0.2% to $38.82.
• Equities are rallying in APAC with the Hang Seng up 2.1% and ASX +0.3%, while the S&P e-mini is 0.1% lower. Oil prices are up with WTI +0.2% to $63.81/bbl. Copper is 0.3% higher.
• The Fed’s Logan and Williams speak later. July Chicago Fed index and August Dallas Fed manufacturing print as well as some July US housing data and Germany’s August Ifo survey.