Ringgit hovers near 5-month low before CPI data

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KUALA LUMPUR (June 20): Ringgit stalls near a five-month low as a rebound in oil prices help offset the cautious sentiment arising from prospects of a global trade war. May inflation data is due.

* USD/MYR is little changed at 4.0035 after reaching 4.0037, highest level since Jan. 11

** Support 3.9430, 3.9391, 3.8533; resistance 4.0060, 4.0155, 4.0406

* Brent crude recovers 0.3% to $75.29 per barrel. Oil prices remain in focus ahead of an OPEC meeting in Vienna this week to discuss a compromise over increased output 

* Higher oil prices are providing ringgit with some buffer against external trade shocks, although it’ll remain on the backfoot given weak regional sentiment, Stephen Innes, head of trading for Asia Pacific at Oanda Corp. in Singapore, writes in note

** MYR has been more resilient than regional peers as positioning is much cleaner, with some outflows having taken place after last month’s election

* CPI seen +1.8% in May y/y vs +1.4% in April, according to Bloomberg survey ahead of data due at noon local time

* Yield on govt bonds due June 2028 is little changed at 4.22%

* Maybank Kim Eng Securities is mildly bullish on Malaysian govt bonds and expects the 10-year yield to decline to around 4%, says Winson Phoon, head of fixed-income research in Singapore

** “Risk premiums attached to Malaysian Government Securities is currently high given policy uncertainty and some negative news flow on Malaysia but things will eventually improve after this so called ‘kitchen-sinking exercise’ period”

* 10-year yield will drop to 4% by year-end as the new govt pares its debt and higher oil prices support state revenue, CIMB said in a report Tuesday

* Malaysia will lay charges against ex-PM Najib Razak including embezzlement and bribery with govt money, Reuters cited PM Mahathir Mohamed as saying Tuesday