What does anaemic US consumer spending imply for DXY and ringgit?

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Anaemic US Consumer Spending Raises Doubts on US Dollar Sustainability and Ringgit Performance

Anaemic growth in US consumer spending, indicated by two consecutive quarters of sub-one per cent growth in personal consumption expenditures (PCE), suggests that the recent rally in the US dollar may not be sustainable. This environment, coupled with potential shifts in geopolitical dynamics, could influence the performance of currencies like the ringgit.
Impact of Consumer Spending on the US Dollar Index (DXY)

The US reported a first-quarter GDP growth of 2.1 per cent, surpassing expectations. However, the PCE inflation rate in May stood at 4.1 per cent. Despite the overall GDP figures, the PCE data, which reflects consumer spending, showed a slowdown. This pattern of subdued consumer spending can create an impression of an economy with underlying weaknesses, potentially dampening investor confidence in the US dollar. Consequently, the US Dollar Index (DXY) experienced a decline of 0.18 per cent to 101.431 points following the release of the PCE data, signalling that market participants are factoring in the impact of this weaker consumer demand.
Geopolitical Factors and Crude Oil Prices

The sustainability of the US dollar's rally is further questioned by external factors, including the outlook for crude oil prices and ongoing geopolitical negotiations. A 60-day timeline for peace deal negotiations between the US and Iran has been established. The reopening of the Strait of Hormuz, a critical oil transit route, has been observed to improve risk appetite in the markets. This improved sentiment can lead investors to move away from safe-haven assets like the US dollar and seek higher yields elsewhere, potentially weakening the greenback.
Ringgit's Performance Against the US Dollar

The ringgit opened marginally lower against the US dollar on Friday, trading at 4.1170/1270 from the previous day's close. While the strengthening US dollar initially put pressure on the ringgit, the easing of tensions related to the Strait of Hormuz and the general improvement in market risk appetite provided some support. This suggests that while US economic data can influence the dollar's strength, broader market sentiment and geopolitical developments also play a significant role in the ringgit's fluctuations against its US counterpart.

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What does anaemic US consumer spending imply for DXY and ringgit?

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