Ringgit climbs as WTI crude enters bull market

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KUALA LUMPUR (Jan 10): Ringgit rises to the highest in more than four months after WTI crude entered a bull market and the dollar faltered again.

* USD/MYR falls 0.2% to 4.1045; reached 4.0950, lowest since Aug. 28

** Support 4.0900, 4.0677, 4.0636; resistance 4.1526, 4.2020, 4.2437

** Dollar extends decline against EM Asia as Fed minutes indicate policymakers are leaning toward a pause in rate hikes

** NOTE: WTI slipped 1.2% on Thursday, paring the 5.2% gain on Wednesday

* Oanda Corp prefers KRW and MYR over INR and IDR, and sees global equities gaining, led by undervalued Asian markets, says Stephen Innes, head of trading for Asia Pacific in Singapore

** “The stars are starting to align for the ringgit with risk on, a dovish Fed, a weaker USD, lower USD bond yields and rising oil prices”

* Citigroup has trimmed its underweight duration overlay in Malaysia to neutral, while maintaining a “reduced” overweight in EMFX positions due to a more dovish Fed, according to note

* Malaysia’s 10-year govt bond yield rose 1bp to 4.09% Wednesday

* Foreign holdings of Malaysian debt and equities remain at multi-year lows although there are signs of stabilization amid recent bond flows, UOB economist Julia Goh and strategist Peter Chia wrote in note

** But it’s premature to expect sustained Asia FX strength given risks to growth, tighter global financial conditions and the prospect of further Fed rate hikes

* Govt aims to collect RM10b from tax amnesty program, with at least 1m taxpayers expected to take part, according to a report in The Star newspaper

* Industrial production probably rose 2.3% in November y/y vs +4.2% in October: Bloomberg survey ahead of data due Friday