Ringgit Gains Ahead Of Malaysia's CPI Report

Spot USD/MYR has dropped in early trade, playing catch up with the overnight decline in U.S. Tsy yields & the greenback. The rate last sits at MYR4.4510, down 70 pips on the day.

• From a technical perspective, losses past the 50-DMA at MYR4.4085 would shift focus to Jun 28/17 lows of MYR4.3958/45. Conversely, a clearance of yesterday's high of MYR4.4583 would bring Mar 10, 2017 high of MYR4.4618 into play.
• Palm oil futures turned their tail on Thursday, but recent cyclical lows have remained intact for now. Prices ebbed lower as comments from Indonesia Palm Oil Board chief did the rounds, fuelling expectations of a surge in shipments from Indonesia in the second half of the year.
• Economy Minister Mustapa Mohamed insisted that the ongoing jumbo infrastructure projects, including the East Coast Rail Link, will continue despite plans to curb public spending. The official noted that "only non-priority projects that don't directly impact people's welfare will be deferred."
• The government is trying to limit public expenditure as state coffers are drained by generous subsidies that keep costs of living in check. The price of these measures is expected to reach MYR77.3bn this year, more than twice than the budgeted amount.
• Despite their cost, subsidies have helped prevent inflation from soaring to levels seen elsewhere. Malaysia's headline inflation is expected to has accelerated to +3.2% Y/Y in June from +2.8% recorded in the previous month (FinMin Zafrul suggested it could have topped +11.0% without government subsidies). The data will cross the wires later today.