Ringgit rises as Fed easing looms, oil rallies

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KUALA LUMPUR (July 11):Ringgit climbs for a second day as a looming U.S. interest-rate cut bolsters demand for risk assets. A 4% jump in Brent crude on Wednesday also helps.

* USD/MYR drops 0.2% to 4.1285; reached 4.1275, lowest since July 1

** Support 4.1236, 4.1065, 4.0930; resistance 4.1545, 4.1840, 4.1935

* Fed is likely to deliver a 25bp rate cut in July, with further uncertainty such as an escalation in U.S.-China trade tensions needed to justify more easing beyond that, says Masakatsu Fukaya, an emerging-markets currency trader at Mizuho Bank in Tokyo

** Favors taking fresh long positions in EM high yielders vs EUR rather than USD as the euro zone’s deteriorating outlook will prompt the ECB to be more dovish than the Fed

* Yield on Malaysia’s govt bond due August 2029 steady at 3.65%

* Benchmark 10-year yield may drop to 3.40%-3.60% by year-end, given balance of risks around the policy outlook and constructive demand-supply dynamics in the next six months, Jennifer Kusuma, senior Asia rates strategist at ANZ, wrote in a note Wednesday

** Onshore investors have absorbed between 100%-140% of the annual net supply since foreigners began exiting in late 2016, and this trend will continue to support the market in near term

* Govt to auction RM3b of 2026 Islamic bonds on Friday: central bank website

* Govt may still have to shut down Malaysia Airlines to save money even as it weighs proposals to rescue the national carrier: PM Mahathir Mohamad

* U.S. Department of Justice is investigating whether Deutsche Bank broke laws during dealings with Malaysia’s 1MDB that included helping it raise $1.2b in 2014, according to the Wall Street Journal