Halister News

(Bloomberg) -- USD/MYR could rally toward 100-DMA resistance in medium term, as geopolitical uncertainty over Brexit may spur risk-off sentiment in coming weeks, Bloomberg strategist David Finnerty writes.

• At its last meeting BNM said the economic outlook is vulnerable to downside risks, including declining commodity prices and rising geopolitical risks
• In recent comments on Malaysian economy the central bank said 1Q CPI spike was due to reduction in electricity tariff rebates in Jan., and base effect from decline in domestic fuel prices in 1Q 2015; implying that rates don’t need to be adjusted to control inflation for now
  • Brent crude oil has rebounded to nearly $50/bbl since then but geopolitical risks exist with Brexit vote on June 23
• This week’s meeting will be first with Muhammad Ibrahim as governor;
  • Most economists don’t see any immediate changes; BNM will leave its overnight policy rate unchanged at 3.25%, according to 20 of 21 economists in Bloomberg survey, with one predicting a 25 bps cut; decision due tomorrow at 6:00pm local time
• USD/MYR up 0.2% to 4.0270; below 100-DMA at 4.1147 since Jan. 26
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.