Consolidates Last Week's Gains Registered On Easing Political Risk

Spot USD/MYR has been rangebound and moved into consolidation mode after taking a dip on the back of local political developments last week. It continues to operate just above multi-month lows, last +15 pips at MYR4.0700.

• PM Muhyiddin spoke at his party Bersatu's annual general meeting, acknowledging tense ties with key coalition partner United Malays National Organisation. The PM urged ruling coalition members to strengthen cooperation in the lead-up to the general election planned for after the Covid-19 pandemic eases off.
• Last week, the embattled PM has managed to win the backing of a majority of lawmakers for his 2021 budget in what was effectively a vote of confidence in his cabinet. The bill was passed in a voice vote rather than roll call vote, leaving the public in the dark about the real parliamentary support for the government. Nonetheless, passing the budget by a voice vote allowed the PM to kick the can down the road, reducing political uncertainty in the near-term and thus providing some support to the ringgit.
• A fall through Nov 26 low of MYR4.0650 would put bears in the position to target MYR4.0515, which represents the YtD low & the trough of the inverse head & shoulders pattern charted in January. Conversely, a bounce above Nov 19 high/50% recovery of the Nov range at MYR4.10003/06 would open up the 50-DMA/Nov 13 high at MYR4.1352/63.
• Malaysian Markit M'fing PMI comes out tomorrow.