- USD/IDR remains on the back foot for second consecutive day despite downside data.
- Indonesia IHS Markit PMI, Inflation step back in June but Core Inflation recovered.
- Indonesia announces 18-day emergency from Friday as covid counts jump to record highs.
- Fedspeak, China’s Xi adds to USD strength ahead of ISM Manufacturing PMI.
USD/IDR stays pressured, down 0.15% intraday to $14,522, ahead of Thursday’s European session. In doing so, the Indonesian rupiah (IDR) pair pays a little heed to the downbeat inflation and activity numbers, as well as the coronavirus (COVID-19)-led pessimism at home, amid strong Core inflation data.
Indonesia’s Inflation eased below 1.41% YoY forecast to 1.33% while the monthly prints dropped past -0.09% expected to -0.16%. Earlier in the day, IHS Markit PMI dropped 55.3 to 53.5 during the stated period. It should be noted that that the Core Inflation data jumped above 1.43% market consensus and 1.37% prior to 1.49% in June.
On the other hand, Asia’s fourth-largest country, population-wise, keeps refreshing all-time high of the covid figures, unfortunately, which in turn pushed the policymakers to announce an emergency from July 02 to July 20. The nation registered 21,807 new cases on Wednesday, per Reuters.
Not only in Indonesia, but the virus woes are dominating in Australia, Malaysia, Thailand and the UK as well. However, the US Centers for Disease Control and Prevention (CDC) remained optimistic over their inoculation and turned down the need to wear masks, per the New York Post.
It’s worth noting that the pair jumped to the highest since April the previous day but cautious mood ahead of today’s US ISM Manufacturing PMI seems to test the greenback buyers off late. Also adding to the USD/IDR weakness could be the upbeat prints of S&P 500 Futures and mildly bid IDX Composite, Indonesia’s equity index.
Moving on, USD/IDR traders should keep their eyes on the covid headlines, as well as Fedspeak, in addition to the US ISM Manufacturing PMI and weekly Jobless Claims, for fresh impulse. Although brighter economics could keep the markets optimistic and weigh on the pair prices, bulls are not out of the woods ahead of Friday’s US NFP.
Read: US ISM Manufacturing June Preview: Expansion to continue but how severe is the labor shortage?
Technical analysis
A downward sloping trend line from October 2020 directs USD/IDR to a three-week-old support line near $14,486.
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