- The USD/IDR pair struggles to justify broad USD strength and expectations of a no rate cut from the Bank Indonesia (BI).
- BI officials argue overall doubting sentiment on the Asian economy.
- The US and Indonesia recently vowed to double the trade volume.
Clubbed between the US-China trade angst and a less likely offer of the fifth rate cut from BI, the USD/IDR pair takes rounds to 14,100 during early Asian session on Thursday.
The pair recently benefited from the broad US dollar (USD) strength that has begun taking clues from the US-China tussle. On the front, Reuters’ anticipate that the United States (US) President Donald Trump will sign Hong Kong Human Rights Bill passed by the Congress and add pressure on to the Asian economies via trade-war risk.
On the positive side, Xinhua released news stating that officers from the US and Indonesia have pledged to edge up the trade volume by twice in the next five years as the two nations still have more business opportunities that can be explored further.
Further, the anticipation of a halt to the Bank Indonesia’s rate cut trajectory after four consecutive actions, as suggested by Bloomberg, should add strength to the Indonesian Rupiah (IDR). It’s worth mentioning that the BI Governor Perry Warjiyo and Deputy Governor Dody Budi Waluyo stayed positive for the economy and the domestic currency while crossing wires during the early-month appearances.
Looking forward to the Bank Indonesia’s (BI) rate decision, the Asian nation’s central bank is expected to announce no change to its benchmark rate of 5.0%. “We look for no change from Bank Indonesia. BI cut its 7-day reverse repo rate by 25bp to 5% at its last meeting but indicated that they will be increasingly data-dependent going forward. Since then CPI came in lower than expected, while manufacturing and consumer confidence fell further and Q3 GDP slowed. The weaker growth trajectory should not have come as a surprise, however, and we don't think it will automatically imply an immediate rate cut. We expect BI to slow the pace of rate cuts, with a pause expected at this meeting as the Bank assesses the impact of previous easing,” says TD Securities ahead of the event.
Technical Analysis
Prices need to cross three-month-old falling trend line, at 14,195 now, in order to take aim at October high near 14,275, failing to which can keep prices around 14,100 and 14,000. It should also be noted that 13,880 acts as the key downside support below 14,000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD keeps the bearish vibe above 1.0870
The EUR/USD pair trades on a negative note during the early European session on Tuesday. The major pair moves in a narrow range between 1.0866 and 1.0876 as traders prefer to wait on the sidelines ahead of the Federal Reserve's interest rate decision on Wednesday.
USD/JPY recaptures 150.00 and beyond, BoJ's Ueda in focus
USD/JPY extends gains beyond 150.00, as the Japanese Yen stays vulnerable amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate to 0% for the first time since 2007 and abandoned the YCC framework. Ueda's presser awaited.
Gold price hangs near one-week low, looks to Fed decision on Wednesday for fresh impetus
Gold price struggles to capitalize on the previous day's bounce from the $2,145 region and oscillates in a range during the Asian session on Tuesday. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside.
Why is the crypto market crashing?
The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms.
Lots of tension ahead of this week's Fed decision
Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.