Ringgit extends drop as dollar strength bites

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KUALA LUMPUR (June 27): Ringgit falls to the lowest level in nearly six months as overnight gains in the dollar overshadow an increase in crude prices.

* USD/MYR advances 0.1% to 4.0245; reached 4.0247, highest since Jan 4

** Support 3.9825, 3.9535, 3.9430; resistance 4.0340, 4.0477, 4.0920

** NOTE: BBDXY steady after climbing 0.3% Tuesday; Brent crude gains 0.5% to $76.69 per barrel after rallying 2.1% overnight

* USD/MYR has retraced nearly three quarters of its December-April drop and is on track to test the December high near 4.0920, Brown Brothers Harriman & Co strategists including Marc Chandler wrote in a note

** Next major retracement objectives from November-April are near 4.05 and 4.10, a break of which would set up a test of the November high near 4.2435

* Asia ex-Japan currencies are expected to remain under pressure amid withdrawal of global stimulus, global trade tensions and concern about slowing growth, says Christopher Wong, senior foreign-exchange strategist at Maybank in Singapore

* 10-year bond yield ended steady at 4.23% Tuesday

* Govt to auction RM3.5 billion of 2033 Islamic bonds on Thursday

* Morgan Stanley maintains paid position in 5-year Malaysian NDIRS, due to what it perceives as low additional risk premia after the elections

* 1MDB’s auditor KPMG has told the company not to rely on its reports over three years as they don’t show “true and fair” assessment of the troubled state fund’s finances