S&P Affirms Malaysia's Ratings, Gov't To Study Covid Situation Before Easing Restrictions

Spot USD/MYR rallied Tuesday, pierced resistance from Mar 31 high of MYR4.1590 and topped out at MYR4.1625, its highest point since Nov 4, 2020, with the 100-DMA crossing above the 200-DMA. After-hours losses in the greenback have applied pressure to the pair as onshore Malaysian markets reopened today and the rate last sits -105 pips at MYR4.1500.

• Bearish focus falls on Jun 18 low of MYR4.1360 and a break here would open up the 50-DMA at MYR4.1246. Bulls would be pleased by a clearance of Jun 22 high of MYR4.1625, which would expose Nov 4 high of MYR4.1745.
• S&P affirmed Malaysia's long-term foreign currency debt rating at A-, leaving outlook at negative. The agency flagged risks surrounding the Covid-19 outbreak and domestic political uncertainty.
• PM Muhyiddin warned that we can expect slight adjustments to the National Recovery Plan, depending on how the Covid-19 situation unfolds. Muhyiddin noted that the gov't will study different parameters before making decision on moving to the second phase of the Plan.
• UMNO Vice-Pres & Defence Min Ismail Sabri sought to water down his party's call for a quick re-opening of parliament. He noted that while UMNO leaders agree that the legislature should reconvene, but they are not unanimous in their interpretations of the phrase "as soon as possible".
• Looking ahead, Malaysia's CPI report is due for release on Friday.