Download Correlation between MYRUSD and Crude Oil

IFA
Special Report
Malaysian Ringgit:
Ringgit: Fate
Fate depend
depend on
on Crude
Crude Oil
Oil
Malaysian
Analysis and Commentary: 23rd January 2015
Summary:
The crude oil prices are in a downward trend since the start of July 2014. The
essential commodity has plunged nearly 55% due to falling demand and glut of
the oil supply. The OPEC (Organization of the petroleum Exporting Countries)
has declared to keep the output unchanged even if the crude oil tumbles below
$20 levels. This crude oil price war between the OPEC and US shale gas has
jeopardized the finances of oil producing countries like Malaysia, Russia and
Nigeria.
Correlation between MYRUSD and Crude Oil
The Malaysian economy, which is second largest exporter of liquefied natural
gas, has been under financial distress ever since crude oil prices started
tumbling. Recently the Malaysian government has revised its fiscal and growth
targets as the country’s revenue has slumped drastically in last few months visa-vis fall in the global crude oil prices. The GDP growth numbers are revised by a
50 basis points cut. Despite being current account surplus economy the
Malaysian central bank has been struggling to contain the sharp depreciation of
Malaysian Ringgit (MYR), which tumbled nearly 15% against the US dollar in last
five months. As the chart depicts the MYR is showing a strong correlation with
the tumbling crude oil prices. The fall in crude oil prices has reduced the FOREX
earning of the economy which in turn has affected its currency.
IFA
Special Report
Malaysian Ringgit: Fate depend on Crude Oil
Analysis and Commentary: 23rd January 2015
Globally, the modest recovery of the US economy has allowed the US Fed to
completely unwind its QE program. The US dollar has gained 13.66% since July
last year against the major currency pairs putting further pressure on the
MYRUSD pair.
USDMYR Weekly Chart
In the above weekly chart of USDMYR, prices are trading in a strong primary
uptrend as we are clearly observing a Higher Bottom Higher Top formation.
Currently, prices are trading near the crucial resistance of 3.6090 which is the
127.6% Fibonacci Extension and the weekly RSI is in the overbought territory. As
the prices are in a primary uptrend and we are not observing any signs of
reversals, any dip in the pair on account of RSI being in overbought territory
should be a good opportunity to buy USDMYR for target of 3.7390 which is the
161.8% Fibonacci Extension and also the previous top.
Based on above factors, we expect USDMYR could correct close to levels of 3.56,
as the RSI is in the overbought territory, but this dip in the pair is a good
opportunity to buy, as USDMYR is trading in a strong uptrend. We expect
USDMYR to go up to levels of 3.7390 where the pair has multiple resistances.
IFA
Special Report
Malaysian Ringgit: Fate depend on Crude Oil
Analysis and Commentary: 23rd January 2015
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