Headwinds For Muhyiddin Intensify, Gov't Relaxes Curbs For Vaccinated Malaysians

The impact of the upbeat NFP report released out of the U.S. Friday has reverberated through markets at the start to the new week, pushing spot USD/MYR higher as trading reopened in Kuala Lumpur. The rate last changes hands at MYR4.2253, 60 pips higher on the day.

• Should bulls manage to force a break above Jul 29 high of MYR4.2405, they could take aim at Jul 21 high of MYR4.2440, a key near-term resistance. Bears look for a dip through Aug 5 low of MYR4.2105, which would shift focus to Jul 15 low of MYR4.1955.
• PM Muhyiddin suffered another setback Friday as Higher Education Minister Noraini stepped down, marking the second resignation by an UMNO lawmaker serving in Cabinet.
• Separately, Deputy PM Ismail Sabri said that 31 MPs from the UMNO-led Barisan Nasional coalition continue to support Muhyiddin. Malaysia's vaccine czar Khairy later confirmed that he would not resign and pull support for the PM, because he has a "trust issue" with UMNO Pres Zahid.
• Ismail Sabri backed his claim by showing a list of lawmakers allegedly supporting Muhyiddin, but two of them later said their signatures only marked their attendance at a meeting with the Deputy PM. One of the two (Noh) noted that he will not support the PM in next month's confidence vote.
• The Straits Times cited three opposition MPs from the Democratic Action Party as claiming that they had been offered cash and seats in Cabinet in exchange for supporting PM Muhyiddin, which they refused to do.
• In the meantime, the gov't eased some restrictions for fully vaccinated people and pledged that there is more coming up. Inoculated Malaysians in states which have moved to Phases 2 and 3 of National Recovery Plan will be allowed to dine in and will face looser curbs on domestic travel.
• Malaysia's Department of Statistics will publish industrial output and manufacturing sales data for the month of June today. Bloomberg consensus forecast points to a 1.0% annual decline in industrial output.
• Later this week, focus turns to Q2 BoP current account balance and GDP, due this coming Friday.