- USD/IDR takes offers to refresh intraday low, snaps four-day uptrend.
- Indonesia Inflation eases to 5.28% YoY, 0.34% MoM during January.
- Mixed sentiment, sluggish yields and optimism in Asia-Pacific zone favor bears.
- FOMC is the key as 0.25% is priced in but Fed Chair Powell is a hawkish policymaker.
USD/IDR returns to the bear’s table after a four-day absence as it drops to $14,970 while refreshing intraday low during early Wednesday. In doing so, the Rupiah (IDR) ignores downbeat figures of Indonesia's Inflation while bracing for the Federal Open Market Committee (FOMC) monetary policy meeting.
That said, Indonesia Inflation eased in January to 5.28% YoY and 0.34% MoM, versus 5.51% and 0.66% respective priors. With this, the inflation gauges also remained below the market forecasts of 5.4% yearly and 0.47% monthly figures. Even so, the key statistics remain beyond Bank Indonesia’s (BI) target and underpin the IDR strength.
Other than the upbeat Indonesia data, cautious optimism in the Asia-Pacific region also seems to favor the USD/IDR bears. It’s worth noting that an index of the Asia-Pacific shares outside Japan prints 0.60% intraday gains by the press time while Indonesia’s benchmark IDX Composite rises 0.37% on a day.
On a broader front, the S&P 500 Futures prints mild losses while the US Treasury bond yields remain sluggish and pause the previous day’s pullback. That said, the US Dollar Index (DXY) struggles to reverse Tuesday’s losses around 102.10.
Elsewhere, downbeat US data strengthened the market’s dovish bias surrounding today’s Fed meeting. However, Fed Chair Jerome Powell’s last hawkish stand and readiness to defend the aggressive rate hikes challenge the USD/IDR downside.
That said, US Employment Cost Index (ECI) for the fourth quarter (Q4) eased to 1.0% versus 1.1% market forecasts and 1.2% prior readings. Further, the Conference Board (CB) Consumer Confidence eased to 107.10 in January versus 108.3 prior. It should be noted that no major attention could be given to the US Chicago Purchasing Managers’ Index (PMI) for January which rose to 44.3 versus 41 expected and 44.9 previous readings.
Moving on, US PMIs could entertain USD/IDR traders but major attention will be given to the Fed’s verdict and Chairman Jerome Powell’s press conference.
Also read: Federal Reserve Preview: The Good, the Bad and the Ugly, why the US Dollar would rise
Technical analysis
A clear downside break of the one-week-old ascending trend line join s Tuesday’s Doji candlestick to favor USD/IDR bears targeting the monthly low of $14,862.
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