Ringgit Strengthens Against USD Amid Weak US Jobs Report

The Malaysian ringgit strengthened against the US dollar following a weaker-than-expected US jobs report, which altered market expectations on the Federal Reserve's policy. The report showed a slowdown in US job creation, prompting traders to increase bets on monetary easing. Market-implied expectations for Fed rate cuts jumped to 64 basis points, and the probability of a September rate cut surged above 90%.

The Malaysian ringgit strengthened significantly against the US dollar on Monday, July 4, following a weaker-than-expected US jobs report. The report indicated a slowdown in US job creation, prompting traders to increase bets on monetary easing by the Federal Reserve (Fed). Market-implied expectations for Fed rate cuts jumped to 64 basis points, and the probability of a September rate cut surged above 90% [1].

The Malaysian ringgit led the advance, strengthening by 1% to 4.233 per dollar, snapping six consecutive sessions of losses. The Indonesian rupiah and Taiwan dollar surged by up to 0.7%, while the Philippine peso added 0.57%. The South Korean won and Singapore dollar edged higher by 0.2% each. The dollar index recovered marginally after tumbling more than 1% on Friday, when President Donald Trump unveiled sweeping tariffs and a dismal US jobs report sent traders scrambling to price in aggressive Fed rate cuts [1].

Investors have shifted focus from trade uncertainties to the impact of the tariffs that have been in place for some time. The tariffs hit Asian countries with rates ranging between 15% and 40%. India faces the steepest levies of major Asian economies at 25%, while South Korea negotiated down to 15% after intensive talks. Several regional players, including Vietnam, Indonesia, the Philippines, Japan, and Cambodia, secured agreements after weeks of negotiations, leaving markets to reassess which economies face the greatest export disruption [1].

Central bank policy remains in focus across the region. The Monetary Authority of Singapore and Bank of Japan maintained current rates alongside the Fed last week. India's central bank meets on Wednesday, while Thailand's rate decision is due next week [1].

The Malaysian ringgit's strengthening can be attributed to the weakened US dollar, which has been under pressure due to the poor jobs report and expectations of further Fed rate cuts. The weaker dollar has made Malaysian exports more competitive, boosting the ringgit. Additionally, the strengthening of the ringgit reflects market expectations that the Fed will continue its easing cycle, which could benefit emerging markets like Malaysia [2].

The US jobs report revealed that payrolls grew by just 73,000 last month, well below forecasts for about 100,000. It also revised down estimates for May and June by a cut of 258,000. With the average gain over the past three months now averaging only 35,000, the health of the labor market is in considerably worse shape than previously believed. This has led to a higher probability of a September rate cut by the Fed [3].

The resignation of FOMC member Adriana Kugler also opens the door for a more dovish Fed shift. Until Friday, analysts had little confidence that the U.S. Federal Reserve was about to deliver an interest rate cut, but last week’s revisions to labor market data have led many to bet in favor of Jerome Powell cutting at the Fed’s next meeting in September [4].

Regional equity markets largely edged higher as the heightened prospect of lower borrowing costs helped soothe concerns about the US economy. Seoul and Singapore gained as much as 1% each, and equities in Mumbai, Bangkok, and Manila rose between 0.4% and 0.8%. Jakarta and Kuala Lumpur bucked the trend, slipping more than 0.3% each [1].

In conclusion, the Malaysian ringgit's strengthening reflects a combination of a weaker US dollar and market expectations of further Fed rate cuts. The US jobs report and the resignation of FOMC member Adriana Kugler have contributed to these expectations. Investors should closely monitor the upcoming ISM services data and jobless claims for further insights into the Fed's policy direction [1].

References:
[1] https://theedgemalaysia.com/node/765182
[2] https://finimize.com/content/palm-oil-prices-slip-as-weak-demand-and-strong-ringgit-bite
[3] https://www.moomoo.com/news/post/27301887/record-tr4cking-news-default
[4] https://fortune.com/2025/08/04/labor-department-data-fed-interest-rate-cut/