Ringgit volatility drops on global trade optimism

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KUALA LUMPUR (Dec 12): A gauge of expected volatility in Malaysia’s ringgit fell for the first time in three days as risk aversion eased amid signs US-China trade relations are improving.

* USD/MYR 1-month implied volatility drops 0.17 vol to 6.15

* Spot USD/MYR is little changed at 4.1830, pausing after a five-day gain

** Support 4.1352, 4.1227, 4.0900; resistance 4.2020, 4.2437, 4.2531

* Most EM Asia FX advance after China was said to be weighing lowering tariffs on US-made cars, and Huawei CFO Meng Wanzhou was granted bail by a Canadian court

* Malaysia’s 10-year bond yield climbs 1bp to 4.10%

* Foreign investors’ positioning in ringgit debt remains light, says Lawrence Lai, a strategist at Standard Chartered Bank in Singapore

** Supply risk may increase in 1Q but ample onshore liquidity, subdued inflation and a stable policy stance are likely to mitigate any selling pressure

* Industrial production +4.2% in October year-on-year vs +2.3% in September, Department of Statistics says

* Former 1MDB President Arul Kanda and previous PM Datuk Seri Najib Razak were charged Wednesday for their alleged roles in tampering with a state audit report into the troubled fund

* Govt will form a special purpose vehicle to take over as much as RM19.9 billion (US$4.8 billion) of pilgrim fund Lembaga Tabung Haji’s underperforming assets

* Oil demand will be at risk as rising crude prices and weakening emerging market currencies may lead to higher oil import bill, state oil company Petronas said in a report Tuesday