FX
  • USD/IDR picks up bids after Indonesia Inflation drops below consensus and prior during March.
  • Covid fears, geopolitical tension also weigh on Indonesian currency.
  • US response to infrastructure spending, ISM Manufacturing PMI will be the key.

USD/IDR bulls attack the $15,000 threshold, after an initial pullback from November high, during early Thursday. While the US dollar strength mixed risk catalysts seemed to have favored the initial run-up, Indonesia’s inflation figures for March become the fuel behind the quote’s recent recovery move.

Indonesia’s Inflation dropped below 1.4% forecast and 1.38% previous readouts to 1.37% YoY whereas Core Inflation slipped beneath 1.44% market consensus to 1.21% yearly figures for March. It’s worth mentioning that the Inflation MoM numbers followed the suit with a 0.08% mark versus 0.14% expected and 0.10% prior.

On Wednesday, Bank Indonesia (BI) Governor Perry Warjiyo said, in a pre-recorded remarks for a Fitch Ratings’ seminar, that they will remain committed to keeping its monetary policy loose, to support economic recovery. Hints of “triple intervention” in the spot were also flashed by the BI Chief as the Asian nation struggles to overcome pandemic-led economic losses.

Additionally, geopolitical tension in Indonesia and the US dollar’s strength, backed by the US Treasury yields and risk-off mood, are extra burdens on the USD/IDR pair.

Looking forward, US ISM Manufacturing PMI and US President Joe Biden’s $2.25 trillion infrastructure plan will be the key to watch ahead of tomorrow’s US employment data.

Technical analysis

A daily closing beyond an ascending trend line from January 11, around 14,590, becomes necessary for the USD/IDR bulls to keep the reins.

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