Ringgit weakens as Powell disappoints Fed doves

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KUALA LUMPUR (Dec 20): Ringgit drops along with most regional currencies after the US Federal Reserve signaled it’ll deliver more policy tightening in 2019 than some investors had expected.

* USD/MYR advances as much as 0.2% to 4.1865

** Support 4.1438, 4.1227, 4.0900; resistance 4.2020, 4.2437, 4.2531

* Scotiabank is moderately bullish on regional FX due to China’s efforts to bolster its economy, and likelihood that regional central banks will remain on hold in the coming months, says Gao Qi, a currency strategist in Singapore

** USD/MYR will likely trade between 4.15-4.20 in near term

* 10-year government bond yield fell 1bp to 4.07%

* CPI +0.2% in November year-on-year vs estimate +0.4%, data showed Wednesday

* Bank Negara Malaysia is unlikely to reset the policy rate path as next year’s inflation expectations will probably remain in check and risks to domestic growth are broadly balanced, UOB senior economist Julia Goh wrote in note Wednesday

** While the global environment has become increasingly challenging, Malaysia’s economy is holding up thanks to private sector spending and expansion in services sector

* Prosecutors charged Roger Ng, a former Goldman Sachs banker, over his alleged involvement in 1MDB transactions arranged by the US bank

** Malaysia is also requesting Goldman’s presence to proceed with trial relating to charges over 1MDB

** READ: Goldman Sachs Prepares to Face Malaysian Legal System: QuickTake