Ringgit volatility climbs on geopolitical risks

Ringgit volatility climbs on geopolitical risks
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KUALA LUMPUR (July 31): A gauge of anticipated swings in the ringgit rises for the first time in four days as the specter of a U.S. military strike on North Korea weighs on emerging Asian currencies.

* 1-month implied volatility for USD/MYR jumps 10bps to 5.85%

* USD/MYR steady at 4.2800

** Support 4.2768, 4.2663, 4.2505; resistance 4.2862, 4.3337, 4.3525

* Ringgit is likely to come under pressure despite oil’s rally and the potential for USD to weaken on softer U.S. GDP data, says Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore

** Concern about the U.S.’s abrasive tone with China on North Korean issue and alleged terrorist plot in Australia will weigh on sentiment

* USD/MYR is expected to trade in a range of 4.25-4.30 for now, Scotiabank FX strategist Qi Gao writes in daily note

* 10-year govt yield rose 7bps last week to 3.99%

** Govt plans to sell bonds with maturities of 3-1/2, 7 and 20 years in August: central bank website

* June money supply data due at 3pm local time

* July Nikkei Malaysia PMI to be released Tuesday; reading was 46.9 in June, lowest since data first made available in 2014