Ringgit Ticks Away From Cycle Lows, Industrial Output Data Eyed

Spot USD/MYR lodged fresh cyclical highs on Thursday, confirming that the broader uptrend remains intact. Overnight improvement in risk sentiment has dragged the pair from there as onshore markets re-opened today. The rate last deals at MYR4.4245, down 30 pips on the day, with bears looking to a fall through trendline support intersecting at MYR4.4096. Below there opens Jun 28/21 lows of MYR4.3958/45. Conversely, a clearance of yesterday's MYR4.4285 peak would expose Mar 23, 2020 high of MYR4.4490.

• Palm oil futures traded in Kuala Lumpur rebounded on Thursday as global recession fears eased somewhat. Resilience in the wider commodity space was linked to China's stimulus plan that may involve allowing local governments to sell CNY1.5tn of special bonds to boost infrastructure funding. Circling back to palm oil futures, there was talk of potential short covering in the wake of their recent slump.
• Malaysia's stash of foreign reserves shrank to the lowest level in 16 months, bi-weekly data released by the central bank on Thursday showed. Stockpiles fell to MYR480.1bn through June 30, which came on the heels of their fastest depletion in seven years recorded through June 15. In light of the observable decline in foreign reserves of several Asian nations over the past few months, speculation has been rife re: potential efforts to "lean against the wind" when it comes to the depreciation of local currencies.
• Malaysia's Department of Statistics will publish industrial production data today. Analysts look for a 6.2% Y/Y increase in output, according to Bloomberg consensus forecast.
• On a different front, the newly formed governmental task force on inflation has asked the BNM and Department of Statistics to issue a clarification on the justification of this week's 25bp increase in the key policy rate.