Ringgit in holding pattern ahead of GDP report

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KUALA LUMPUR (Feb 14): Ringgit trades in a narrow range as investors await Malaysia’s fourth-quarter economic growth and current-account data.

* USD/MYR steady at 4.0665 vs range of 4.0667-4.0738

** Support 4.0639, 4.0550, 4.0435; resistance 4.1045, 4.1379, 4.1504

* MYR is among FX that are likely to be favored as the Fed’s dovish pivot fuels demand for carry trades, according to Bloomberg’s analysis

* GDP probably increased 4.5% in 4Q y/y vs +4.4% in 3Q, which was the slowest pace in two years, according to a Bloomberg survey ahead of data due at noon local time

** 4Q current-account surplus seen at RM9.3b vs RM3.8b in 3Q: Bloomberg survey

* 10-year govt bond yield steady at 3.97%

* Auction of RM4b of 2029 govt bonds closes at 11:30am local time

* By some measures, Malaysian govt bonds are attractive as close-to-zero inflation means that real rates are very high, says Eugene Leow, a rates strategist at DBS Bank in Singapore. 

** Thursday’s report is likely to show growth is stable, and the current-account balance will be in focus given the deterioration in the primary balance over the past few quarters

** “If CPI stays low and the external environment stays benign, speculation of rate cuts would grow, supporting front-end MYR rates”

* Anwar Ibrahim, head of Malaysia’s ruling party, said Wednesday the nation “will not compromise” in its talks with Goldman Sachs over the 1MDB scandal, and the bank “must bear responsibility”

** Anwar also said he expects to take over from PM Mahathir Mohamad in less than two years