- USD/IDR pares Monday’s heavy losses even after strong Indonesia Retail Sales growth for June.
- Indonesia cuts export tax threshold for crude palm oil, government expected 5.00-5.2% GDP growth for 2022.
- Sluggish yields, cautious mood keeps the US dollar on the front foot ahead of Wednesday’s US inflation data.
USD/IDR grinds higher around 14,860, paring the week-start slump, as traders ignore positive catalysts from Indonesia amid anxiety ahead of the US Consumer Price Index (CPI) for July, up for publishing on Wednesday. It’s worth noting that the Indonesia rupiah (IDR) prints 0.20% intraday gains during the early Tuesday morning in Europe.
Among the latest factors, Indonesia’s Retail Sales for June and the government’s announcements of the 2022 Gross Domestic Product (GDP) forecast gain major attention. On the same line was news surrounding the cut in export tax threshold for crude palm oil, the nation’s key export item.
Indonesia’s Retail Sales rose 4.1% YoY in June versus 2.9% prior readings, per the latest data from the Bank Indonesia (BI).
Elsewhere, “Indonesia’s government expects 2022 GDP growth to be in a range of 5% to 5.2%, its deputy finance minister said on Tuesday, after data showed earlier this month that second-quarter growth accelerated to 5.44%, above market expectations,” said Reuters. Furthermore, Indonesia on Tuesday lowered its threshold for applying the export tax on crude palm oil to a reference price of $680 per tonne, down from $750 per tonne previously, according to a finance ministry regulation, Reuters news said.
Alternatively, the US 10-year Treasury yields remain inactive at around 2.75%, following nearly seven basis points (bps) of the downside on Monday and a 14-bps run-up on Friday. The same challenges the US Dollar Index (DXY) ahead of the US Nonfarm Productivity and Unit Labor Costs for the second quarter (Q2). Forecasts suggest that the US Nonfarm Productivity could improve to -4.6% from -7.3% prior while Unit Labor Costs may ease to 9.5% versus 12.6% in previous readings.
Although the second-tier US data may entertain USD/IDR traders, major attention will be on Wednesday’s US CPI as the latest Fed fund futures and Friday’s US jobs report propel the odds of the 75 basis points (bps) rate hike in September, which in turn teases US dollar buyers.
Despite the latest rebound, USD/IDR remains below the 50-DMA hurdle surrounding 14,930, as well as a downward sloping resistance line from early July near 14,945, which in turn keeps sellers hopeful.