THE ringgit is expected to trade within a narrow range against the US dollar next week as global investors await a series of closely watched United States labour market reports that could influence expectations for future interest rate decisions by the Federal Reserve.
Market sentiment is likely to be shaped by the release of the US Nonfarm Payrolls (NFP) report and unemployment data, both regarded as critical indicators of the strength of the world's largest economy and the future direction of American monetary policy.
Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid said trading activity may remain relatively muted due to the shortened trading week, with Malaysian financial markets closed for the King's Birthday and Wesak Day public holidays before reopening on 3 June.
According to Afzanizam, investors will be paying particular attention to labour market conditions in the United States as policymakers continue to assess inflationary pressures and their implications for interest rates.
"As such, labour market data will be crucial in assessing the case for further monetary policy tightening," he told Bernama.
He noted that inflationary pressures in the United States remain elevated despite previous policy measures implemented by the Federal Reserve. The latest Personal Consumption Expenditures (PCE) inflation reading stood at 3.8 per cent in April, significantly above the central bank's long-term target of two per cent.
The persistence of inflation has reinforced market expectations that US policymakers may maintain a cautious stance on interest rates, making upcoming employment figures particularly important for financial markets worldwide.
Against this backdrop, the ringgit is forecast to trade between RM3.95 and RM3.97 against the US dollar over the coming week as investors adopt a wait-and-see approach.
Despite global uncertainties, the Malaysian currency ended the week on a slightly firmer footing against the greenback. On a Friday-to-Friday basis, the ringgit strengthened to 3.9625/9670 against the US dollar compared with 3.9655/9700 a week earlier.
The local currency also recorded mixed performances against major global currencies.
It appreciated against the British pound and Japanese yen during the week, reflecting selective strength amid fluctuating market sentiment. However, it weakened slightly against the euro as investors reassessed economic prospects across major economies.
Against regional currencies, the ringgit's performance was more subdued. The currency gained ground against the Indonesian rupiah but declined against the Singapore dollar, Thai baht and Philippine peso, reflecting varying economic conditions and capital flows across Southeast Asia.
Analysts expect currency markets to remain sensitive to developments in US economic data, with any signs of continued labour market resilience potentially strengthening the US dollar and influencing capital flows into emerging markets.
For the ringgit, the immediate outlook remains closely tied to global monetary policy expectations, making next week's employment figures one of the most significant indicators for currency traders and investors seeking direction in the weeks ahead. - May 30, 2026
