MYR: USDMYR Holds Near Oversold on 14 RSI

The BBDXY range Friday night was 1218.44 - 1221.43, Asia is currently trading around 1220, -0.01%. The USD built on its gains from last week into the month-end. The 1220-30 area remains tough resistance, only a sustained close back above 1230 would start to challenge the conviction of the longer-term USD shorts. Risk/Reward does still favour fading this moving initially but the price action is starting to look more constructive as higher lows are being made on the Daily chart through October. A sustained move back above 1230 would potentially signal a medium term low is in place and a deeper pullback is on the cards. 

• Lance Roberts points out on X that: “There are still a lot of shorts on the dollar, which could fuel a further advance if they are forced to cover.” 
• He also refers to a note put out by SocGen: "Over the past decade, the US has consistently outpaced the Eurozone in GDP growth, yields, and inflation — supporting an average EUR/USD near 1.12.”
• “After narrowing growth and rate gaps lifted the euro to 1.19 earlier this year, weaker Eurozone forecasts now point to limited upside, with EUR/USD likely reverting toward its long-term average around 1.12 in the next 18 months." - Societe Generale

Fig 1: BBDXY Weekly Chart

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

• The September expansion of the RatingDog PMI manufacturing seemed to  reflect a period of expansion ahead of the Xi Trump meeting.  
• Whilst today's release for the October data will not capture the impact of the meeting, it is more reflective of the type of expansion that is occurring we think.  
• Up +50.6 in October it is a significant decline from the +51.2 in September, but importantly is the third month in a row of expansion.  
• Output declined to +50.8 from 52.0 and new orders declined from the month prior.  

• CHINA OCT RATINGDOG MANUFACTURING PMI 50.6 VS 51.2 IN SEP