Ringgit halts 2-day gain as dollar appreciates

(Oct 17): Ringgit falls for first time in three days as the dollar advances and energy prices consolidate after a recent streak of gains.

* USD/MYR appreciates 0.1% to 4.2203

** Support 4.2090, 4.1825, 4.1733; resistance 4.2440, 4.2443, 4.2644

** Bloomberg Dollar Spot Index climbs 0.1%; crude drops 0.1%

* MYR will derive near-term support from higher oil prices and an improving economy while the upcoming federal budget is likely to contain populist measures ahead of the general election, says Trinh Nguyen, senior economist at Natixis SA in Hong Kong

** Key theme for Asian FX on Tuesday is market’s pricing of a Fed rate hike in December and increasingly for March, depending on who replaces Janet Yellen as Fed chair

* With dollar expected to weaken further, USD/MYR is likely to have peaked and may trade lower in the next couple of years, Commonwealth Bank of Australia strategist Andy Ji writes in note

** Pegs fair value for pair at 4.00 although fears of capital flight and deteriorating macroeconomic backdrop will continue to weigh

** Sees maintaining benchmark rate at 3% in 2017 with a chance of further easing should consumer spending slow more than expected

* Global funds sold net RM54.2 million of Malaysian stocks in week ended Oct. 13, a fourth straight week of outflows: MIDF Amanah Investment

Source: The Edge Markets

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