USD/MYR Consolidates After Dollar-Led Rally

Spot USD/MYR rallied into Thursday's close of the onshore trade as the greenback outperformed EMs, with demand for USD/CNH spilling over into the redback's regional peers. The rate extended gains in early trade this morning, but failed to make much headway and trimmed gains. It last changes hands +35 pips at MYR4.0410.

• Malaysia's Director-General of Health Noor Hisham warned that the country could see its daily count of Covid-19 infections reach 8,000 by mid-March if the infectivity rate R0 rises to 1.2 from its current level of 1.1. Noor Hisham earlier said that discussions are ongoing over implementing targeted "circuit breaker" lockdowns across Malaysia.
• In local politics, PAS offered to act as a mediator between UMNO and BERSATU in an attempt to fix the strained relationship between the two main parties forming the ruling coalition. Meanwhile, Wednesday saw UMNO supreme council decide that a motion to sever ties with BERSATU before the next general election will be tabled at the party's general assembly slated for Jan 31. Elsewhere, ex-PM Mahathir's application to register a new political party was rejected, but Mahathir pledged to appeal.
• A push through Dec 23, 2020 high of MYR4.0673 would support the bullish case, turning focus to the 50-DMA, which intersects at MYR4.0798. Conversely, a retreat under Jan 4 low of MYR3.9957 would allow bears to reassert control.
• An update on Malaysia's foreign reserves is due later today, with domestic industrial output coming up just after the weekend.