KUALA LUMPUR (March 7): AmBank Group Research expects the ringgit (MYR) to trade between its support level of S1: 3.8911 and S2: 3.8864 while the resistance is pegged at R1: 3.9056 and R2: 3.9114 supported by stable relative strength index and narrowing MACD gap.
In his AmBankFXDaily note today, AmBank group chief economist and head of research Dr Anthony Dass said the MYR appreciated 0.08% to 3.9035 against the US Dollar.
He said the crude oil prices diverged with WTI down 0.1% to 62.50 per barrel and Brent up 0.2% to S$65.69 per barrel respectively, after US inventories reported to have accumulated 5.7 million barrels last week, beating consensus of 2.7 million barrels suggesting supply forces are stronger than anticipated.
“Meanwhile, the KLCI rose 0.3% 1,848.37 with a net inflow of foreign funds amounting to RM15.3 million.
“The 7- and 10-year Malaysian Government Securities yields stayed unchanged at 3.885% and 4.010% while the 5-year yield fell 2.5bps to 3.585%.
“The MYR was firm against regional peers like Singapore dollar by 0.09% to 2.9581, and rupiah by 0.2% to 3,529.01, peso by 0.2% to 13.3301, but was softer against baht by 0.3% to 8.0168. The 5 year CDS fell 1.06% to 62.08,”he said.
On the market outlook, Dass said Bank Negara Malaysia (BNM) is scheduled for its second MPC meeting later today.
Dass said he expects BNM to remain neutral on its current accommodative monetary policy, implying no change to the policy rate.
“Slower gain in January’s inflation and weak PPI figures in addition to the stronger ringgit against the USD provides some breathing space for BNM to maintain the current policy rate.
“We will be looking out on BNM’s tone on the economic outlook as well as inflation.
“While our base case for 2018 is for the OPR to stay put at 3.25%, we have priced in a 20% chance for a second rate hike of 25 basis points in 2H2018,” he said.