Ringgit Firms As Faster Inflation Supports Case For More OPR Hikes

Spot USD/MYR has shed 65 pips this morning and last trades at MYR4.4835, holding yesterday's range. Sales past the 50-DMA (MYR4.4458) would shift focus to MYR4.4355, the low print of Aug 11. Bulls need a clearance of Aug 23 high of MYR4.4913 before setting their sights on Jan 4, 2017 high of MYR4.5002.

• The FTSE Bursa Malaysia KLCI Index recouped its opening losses on Monday, eking out some modest gains come the closing bell.
• Palm oil futures crept higher in after-hours trade. The contract for November delivery finished +MYR42 at MYR4,216/MT. Indonesia's decision to raise its export tax lent support to palm oil prices.
• Malaysia's CPI inflation accelerated to +4.0% Y/Y in Jul from +3.4% prior, matching the consensus forecast, according to data released Monday. Surging costs of food added fuel to headline inflation, but core prices also grew at a decent pace (fastest since Mar 2016) of +3.4%, up from Jun's +3.0%.
• While the BNM does not operate a numeric inflation target, it aims to "maintain a low and predictable pace of inflation." It has forecast price growth to average within the +2.2%-3.2% Y/Y range this year. The central bank has two monetary policy meetings left this year, with inflation data cementing the case for further OPR hikes.
• The only notable local data release during the remainder of this week is S&P Global M'fing PMI, coming up Thursday.