- USD/IDR stays on the front foot as Indonesian Inflation rises 1.54% YoY in July.
- US dollar’s pullback from multi-week low, fears of the return of tough lockdown restrictions add strength to the pair.
- US PMI, risk catalysts in the spotlight for fresh impetus.
USD/IDR takes the bids near 14,695 ahead of the European session on Monday. The pair recently gained bids after Indonesia’s July month inflation data came out as dismal. Further pleasing the pair bulls is the broad US dollar pullback from over two-year bottom.
Indonesia’s July month Inflation slipped below 1.96% prior and 1.66% forecast to 1.54% on YoY. The core readings followed the footsteps with a 2.07% mark versus 2.11% expected and 2.26% previous print. It should be noted that Inflation MoM flashed negative prints of -0.1% compared to 0.03% market consensus and 0.18% previous outcomes.
Not only the inflation data but the Foreign visitor arrivals, one of the key earning sources, also disappoints the Indonesian rupiah buyers. Reuters quotes Indonesian Statistics Bureau while saying that there was some increase in arrivals in the capital Jakarta in June from May, but the figure was “far from normal levels”, while the country’s other top destination, the resort island of Bali, was still closed to foreigners.
The reason is the wave 2.0 of the coronavirus (COVID-19) which again challenges the Asian nation’s recovery moves. Bloomberg cites IDX Composite’s steepest declines since mid-April to convey that rising infections forced the capital city to delay the easing of social distancing measures by at least another two weeks. As per the latest updates from Reuters, “Indonesia reported 1,519 new coronavirus infections on Sunday, bringing the total to 111,455, data from the country’s COVID-19 task force showed.”
On the other hand, US policymakers failed to provide details of the much-awaited fiscal stimulus. House Speaker Nancy Pelosi recently cited the US President Trump responsible for their failure to agree over the unemployment claim benefits despite the help’s expiration on Friday. This seems to have pushed the global rating giant Fitch to degrade the US outlook from stable to negative.
Against this backdrop, stocks in Asia-Pacific trades mixed while the US 10-year Treasury yields and the S&P 500 Futures stay mildly positive by the press tie.
Traders await the early-month activity numbers for fresh impulse. Though, major attention will be given to risk catalysts like virus updates and news on the US fiscal plan for additional direction.
Technical analysis
Unless witnessing a daily close below 200-day SMA level of 14,477, sellers are less likely to enter, which in turn keeps buyers targeting July month high of 14,960 hopeful.
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