Political Turmoil Continues, King Wants Confidence Vote Sooner

Spot USD/MYR reopened lower this morning, in a delayed reaction to U.S. inflation data released after Kuala Lumpur hours on Wednesday. The monthly CPI report pulled the rug from beneath the greenback yesterday. The rate last operates -42 pips at MYR4.2358, still within the confines of yesterday's range.

• Following a breach of descending channel top yesterday, further gains past Jul 21 high of MYR4.2440 would confirm mounting bullish momentum and the formation of a bullish flag pattern. Conversely, bears look for a pullback under Aug 5 low of MYR4.2105.
• The Straits Times reported that Malaysia's King asked PM Muhyiddin to bring forward the confidence vote, with next Wednesday proposed as a possible date. The Premier also held talks with leaders of his Perikatan Nasional (PN) alliance, but few details are known about the details of the meeting.
• Grassroots UMNO leaders interviewed by Free Malaysia Today suggested that tensions between Malaysia's largest party and PM Muhyiddin's Bersaty have been building for a long time. They identified Muhyiddin's handling of the pandemic, transfers of UMNO MPs to Bersatu, lack of inter-party communication and the refusal to reconvene parliament as key sources of conflict.
• Bank Negara Malaysia said in a statement that the base rate will be replaced by the standardised base rate as the reference rate for new retail floating-rate loans. The new framework will take effect from Aug 1, 2022.
• A surprise drop in Malaysia's palm oil stockpiles reported Wednesday allowed this commodity to register its largest upswing since 2009. Inventories were expected to grow to 1.62mn tons in July, according to BBG median estimate, but shrank to 1.50mn tons from 1.61mn tons. Shipments fell less than expected, while output contracted in line with forecasts.
• The local data docket is headlined by Q2 GDP & BoP current account balance, due Friday.