Ringgit consolidates as Fed affirms rate path

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KUALA LUMPUR (Aug 2): Ringgit trades in a narrow range after the Federal Reserve’s review yielded few surprises, with policy makers sticking with a plan to gradually lift borrowing costs. Investors are bracing for China’s response to a planned increase in US tariffs.

* USD/MYR little changed at 4.0660 vs range of 4.0652-4.0675; rose 0.2% over last two days

* The ringgit remains at the mercy of a stronger dollar and a weak Chinese yuan, says Khoon Goh, Singapore-based head of Asia research at ANZ

** Persistent foreign-portfolio outflows since May are a key factor behind MYR’s weakness as investors await the new govt’s budget due in November

** Sees resistance for USD/MYR at 4.09 and support at 4.02

* NOTE: Govt will review its medium-term economic growth targets, Economic Affairs Minister Datuk Seri Azmin Ali said Wednesday; review to take into account challenges such as China-US trade war and volatile oil prices

* With limited domestic catalysts, ringgit will continue to be vulnerable to external risks, especially global trade tensions, AmBank writes in daily note

** Pegs support for USD/MYR at 4.0571 and 4.0615 and resistance at 4.0716 and 4.0767

* Malaysia exports probably +11.5% in June y/y vs +3.4% in May: Bloomberg survey before data due Friday

** Trade surplus RM9.4 billion vs RM8.12 billion: survey