Ringgit extends gains as macro funds lead risk bids

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KUALA LUMPUR (July 9): Ringgit edges higher for a fourth day as U.S. jobs data curbed expectations for a more aggressive pace of Federal Reserve tightening. Macro funds were seen buying the ringgit as part of a move into EM Asia, a trader says.

* USD/MYR declines 0.1% to 4.0380.
** Support 3.9975, 3.9825, 3.9789; resistance 4.0515, 4.0660,4.0920.

** NOTE: U.S. June non-farm payrolls beat estimates but unemployment rose and wage growth missed forecasts. 
* USD/MYR will probably trade within 4.03-4.06 range over next few days as trade war risks weigh, although external backdrop is largely positive, says Sim Moh Siong, a currency strategist at Bank of Singapore Ltd.

** Expects BNM to remain on hold at policy review Wednesday**

 READ: Ringgit’s resilience under threat as case for rate cut grows.

* 10-year govt bond yield fell 4bps to 4.11% on July 6.

* Overseas holdings of government bonds declined 3.9% m/m to 14-month low of 165b ringgit in June: central bank data.

* Outflow risks remain in the near term though foreign sentiment toward Malaysian assets will improve in 2H, Maybank Kim Eng Securities analysts Winson Phoon and Se Tho Mun Yi wrote in report.

** Foreign positioning risk in onshore government debt isn’t significant, given domestic bonds have recorded 40b ringgit of outflows since 2013.

* Foreign reserves dropped 3% to US$104.7b in the final two weeks of June, lowest since mid-March: central bank data.

* Malaysia’s anti-graft officials have almost completed probe into state fund 1MDB and is now gathering evidence from overseas: Bernama

* Former PM Najib Razak will apply to the court to disqualify Attorney General Tommy Thomas from heading the prosecution in his case, according to a July 6 report in The Star, citing lawyer Muhammad Shafee Abdullah.