KUALA LUMPUR: The outlook for the ringgit this week is expected to be “neutral to bullish” on improving sentiment anticipation following major central banks’ decisions.

Kenanga Research said a potential policy tweak by the Bank of Japan (BoJ) and the market’s anticipation of a continued pause by the US Federal Reserve (Fed) and a relatively weak US jobs report might temper the US dollar’s ascent this week.

The research house said central bank meetings such as the Federal Open Market Committee meeting, BoJ and the Bank Negara’s Monetary Policy Committee’s (MPC) last meeting are scheduled for this week.“The ringgit may reverse its weakness against the US dollar should risk sentiment improve with the pair’s immediate support awaiting at 4.773,” it said in a research note.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said he expected Bank Negara to retain the overnight policy rate at 3%.

“The focus for this week will be on the FOMC meeting and Bank Negara’s MPC meeting,” Mohd Afzanizam said.

He added the markets would be observing the latest assessment by the Fed on the outlook for the US economy.

“Thus far, the third quarter data showed the US economy has been quite resilient with growth recorded at 4.9%,” he said.

He said that looking at the US economic data, a 25-basis-point hike is almost a given this week.

On top of that, the market will also continue to remain cautious in light of the ongoing Israel-Hamas conflict.

As such, he said the ringgit might maintain range bound between the 4.77 and 4.78 level.

On a Friday-to-Friday basis, the ringgit weakened against the US dollar to 4.7750/7800 from 4.7655/7700 a week earlier amid the ongoing conflict in the Middle East and cautious sentiment ahead of US economic data releases. — Bernama