- USD/IDR takes offers to renew weekly low, down for the third consecutive day.
- Downbeat US PMIs, positioning for BI status quo weigh on Indonesia Rupiah.
- Optimism in China, receding fears of higher rates elsewhere add strength to bearish bias.
- Bank Indonesia is expected to keep rates unchanged at 5.75%; Fed Chair Powell’s speech at Jackson Hole is crucial.
USD/IDR prepares for the Bank Indonesia (BI) Interest Rate Decision by refreshing the weekly low near 15,250 early Thursday. In doing so, the Indonesia Rupiah (IDR) pair cheers the downbeat US Dollar and slightly positive mood in the Asia-Pacific zone to print a three-day losing streak.
The US Dollar Index (DXY) remains pressured around 103.30 after reversing from an 11-week high the previous day. That said, the Greenback’s gauge versus the six major currencies reached a multi-day high amid the market’s anxiety ahead of the top-tier data/events. However, downbeat prints of the US PMIs for August, as well as unimpressive housing data, pushed back the hawkish bias about the Federal Reserve and weighed on the DXY afterward.
Not only in the US but softer activity numbers from the major economies also tame fears of the higher rates and allow the traders to pare previous losses amid the upbeat performance of Wall Street and a slump in the US Treasury bond yields.
It’s worth noting that optimism in China, one of Indonesia’s biggest customers, also allows the USD/IDR bears to better prepare for the BI Interest Rate Decision even as no change is expected in the benchmark 5.75% rates.
Amid these plays, S&P500 Futures rose 0.70% to 4,480 by the press time, after rising the most in a month the previous day, whereas stocks in China and Hong Kong are up as well. Also, the US 10-year Treasury bond yields seesaw around 4.20%, pausing a two-day losing streak from the highest level since 2007, following the biggest daily slump in three weeks.
Looking forward, the BI decision is less likely to affect the USD/IDR price unless it offers any major surprises, which are off the table. As a result, today’s US Durable Goods Orders, Chicago Fed National Activity Index, Kansas Fed Manufacturing Activity and weekly Jobless Claims should be watched carefully for intraday directions. Above all, the two-day-long annual Jackson Hole Symposium and Friday’s Fed Chair Jerome Powell’s speech at the key event will be crucial for a clear guide.
Technical analysis
Although the USD/IDR pair’s failure to cross the 15,400 hurdle weighs on the prices, a one-month-old rising support line joins the 21-DMA to restrict immediate downside to around 15,250.
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