KUALA LUMPUR (Dec 30): MIDF Amanah Investment Bank Bhd Research said it expects the ringgit to float around 4.18 during 2020 and end at 4.20.

In its Weekly Money Review note today, the research house said the ringgit improved further as global trade sees positive development as US and China are expected to sign the phase one deal very soon.

"Following that, commodity prices like Brent oil and crude palm oil surged above US$65 (RM267.47) per barrel and RM3,000 per metric tonne last week," it added.

It said trade tension, geopolitical instability, policy and political uncertainties, loosening monetary policy, volatility in commodities prices remain as key factors affecting growth trajectory.

"Global economy in 2020 is expected to continue in moderation due to trade war tension, political instability in developed economies and volatility in commodity prices," the research house said.

MIDF Research said it expects the US Federal Reserve to announce two rate cuts next year amid gross domestic product moderation.

It also said developed and emerging economies are predicted to follow similar steps in loosening monetary policy to boost economic growth.

Malaysia's economy is predicted to grow by 4.5% in 2020, slightly lower than this year's 4.6%.

Inflationary pressure is set to rise at 2.4% in 2020 due to the floating fuel price mechanism. Transport price covers about 15% of CPI basket and its spillover effects would cause other goods' prices to increase, it said.

The research house said the rebound in investments side, steady domestic spending and recovery in commodity-based sectors are expected to drive the Malaysian economy.

"We expect Bank Negara Malaysia to slash further OPR by 25 basis points in 2020, possibly the earliest in the first quarter of 2020," it said.

Meanwhile, Bloomberg reported that ringgit climbed to a five-month high in muted year-end trading as the US dollar's weakness persists amid broad risk-on sentiment.

The newswire reported that US$/ringgit fell 0.2% to 4.1175, the lowest since July 26, adding that the pair may head for July's low of 4.1038 after weekly close below trend line support which began off March's low.

"Support 4.1135; resistance 4.1680, 4.1943, 4.1993.

"Pair has dropped 1.6% this quarter, most since three months ended March 2018," it said.

Bloomberg also said global funds sold a net US$400,000 in local equities on Dec 26, taking year-to-date outflows to US$2.6 billion.

It said 10-year government bond yield dropped 1 basis point to 3.34% and fell 5 basis points last week.