Ringgit touches 1-year high on surplus outlook

Ringgit touches 1-year high on surplus outlook
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KUALA LUMPUR (Nov 16): Ringgit touches the strongest in a year before a report on Friday forecast to show Malaysia’s current-account surplus widened last quarter.

* USD/MYR little changed at 4.1788 after dropping to 4.1725, lowest since Oct. 2016

** Support 4.1442, 4.0962; resistance 4.1990, 4.2440, 4.2535

* USD/MYR has traded below its September lows amid renewed USD weakness, opening up potential for further downside despite a recent drop in oil prices, says Andy Ji, currency strategist at Commonwealth Bank of Australia in Singapore

** If U.S. tax reform falls through, next key level for pair will be 4 handle

* Malaysia’s 3Q current-account surplus widened to RM12.9b from RM9.6 in 2Q: Bloomberg survey

** 3Q GDP report also due Friday; median estimate 5.7% y/y growth vs 5.8% in 2Q

* Slight slowdown in growth last quarter is due to high base effect, and balance of economic risks is shifting from growth to inflation, ING economist Prakash Sakpal writes in note

** Recent floods in some parts of Malaysia will add to seasonal year-end increase in food prices, keeping inflation elevated
above BNM’s 3%-4% target

** ING is reviewing its forecast for timing of first BNM rate hike in 3Q18 with view of bringing it forward

* 10-year govt bond yield climbs 1bp to 4.03%

* 5-DMA of net foreign outflows from Malaysian stocks accelerated to $720,000 in past week vs 20-DMA of $650,000: data compiled by Bloomberg