Ringgit hemmed in tight range ahead of output data

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KUALA LUMPUR (March 13): Ringgit trades in a narrow range ahead of a report that’s forecast to show Malaysian factory output sustained its growth momentum in January.

* USD/MYR steady at 3.9045 vs range of 3.9005-3.9045

** Support 3.8857, 3.8663, 3.8465; resistance 3.9313, 3.9395, 4.0055

* Industrial production is estimated to have risen 6.8% y/y in January vs +2.9% in December: Bloomberg survey ahead of data due at noon local time

* Brown Brothers Harriman remains positive on the ringgit although its current level “looks strong for the economy,” Masashi Murata, a currency strategist at Brown Brothers Harriman in Tokyo

** Expects USD/MYR to trade in a range of 3.88-3.94 this month

** PHP, IDR and INR may be sold against the dollar as investors correct some long positions while KRW, TWD, MYR and SGD will fare better due to stronger fundamentals

* CIBC Asset Management raised its bets on the ringgit as the currency should be trading 17% stronger, according to money manager Luc de la Durantaye * 10-year govt bond yield steady at 3.99% Monday

* Auction of RM3b of 2025 govt bonds closes at 11:30am

* Overseas investors sold net RM299.1m of Malaysian stocks in week ended March 9, biggest weekly outflow in a month: MIDF Amanah Investment

* Morgan Stanley is turning neutral from bullish on EM local markets as it sees increased volatility despite improved sentiment fueled by the ‘Goldilocks’ U.S. jobs data, strategists including James Lord wrote in a report Monday

** Real yield spread between EM and U.S. bonds is below post-crisis average, which means EM sensitivity to external risks such as higher U.S. rates or trade tensions may rise