FOREX: BBDXY Steady Ahead Of Payrolls, AUD & NZD Worst Performing G10 FX

Q4 Indonesian GDP was as expected rising 0.5% q/q and 5.0% y/y up from 4.9% in Q3 leaving 2024 up 5% in line with 2023. Bank Indonesia said in January that it expected 2024 growth to be “slightly below the midpoint of the 4.7-5.5% range” and for Q4 to be “slightly” below expectations due to lower domestic demand. It has cut rates 50bp this cycle and continues to support growth with macroprudential policies given its focus on the rupiah which has been weaker. This should continue in 2025 accompanied by more rate cuts.

• 2024 GDP was below the government’s 5.2% target, while new President Prabowo is aiming for growth to reach 8% during his term and has increased fiscal stimulus plans as a result.
• BI revised down its 2025 GDP range slightly in January to 4.7-5.5% from 4.8-5.6% because of weak private investment.
• Domestic demand slowed slightly in Q4 rising 4.9% y/y after 5.0% in Q3 driven by a slowdown in government consumption growth to 4.2% y/y from 4.6% y/y. Private consumption was slightly stronger at 5.0% y/y from 4.9%, the highest since Q3 2023 and in line with growth over the last three years. GFCF grew at 5.0% y/y after 5.1% in Q3.
• Export growth slowed to 7.6% y/y in Q4 after 9.1% but 2024 saw an improvement to 6.6% from 1.3% the previous year.
• USDIDR is off its Monday high of 16471 helped by BI intervention and market stabilisation following deals to delay US tariffs on Mexico and Canada. USDIDR is at 16309, which is slightly lower than January 15, the last BI decision, which should reassure BI.

Indonesia growth y/y%

• Tsys futures were slightly lower in morning trading, however has since pared losses to trade little changed. TU is -00¼ at 102-26⅞, while TY is unchanged at 109-06+.
• Treasury futures continue to trade below their recent highs. A corrective cycle remains in play and the contract is holding on to the bulk of its recent gains. TY key resistance at 109-10, the 50-day EMA, has been pierced. A clear break of it would strengthen a bullish theme and open 109-31, the Dec 18 high. The medium-term trend condition remains bearish. The bear trigger is 107-06, the Jan 13 low. Initial firm support is 108-06, the Jan 23 low.
• Cash tsys yields initially traded 1-2bps higher this morning, however has since reversed those moves with yields now flat to 0.5bps lower. The 2yr is unch at 4.214%, while the 10yr is -0.4bps at 4.507%, the 10yr has traded in a roughly 10bps range for the past two weeks now, while the 2s10s has flattened about 4bps over the same period.
• US Postal Service is stopping inbound parcels from China and Hong Kong in potentially another sign of worsening trade tensions between Beijing and Washington.

Yen gains have dominated the G10 space so far in Wednesday trade. USD/JPY was last near 153.20/25, up slightly on earlier lows of 153.10. We are +0.70% firmer in yen terms for the session so far. We are sub the Dec 18 low (153.34), with scope for a move towards 152.55, 61.8% retracement of the Dec 3 - Jan 10 bull leg.

• Not surprisingly, USD/JPY has dominated the options volumes per DTCC. Yen has accounted for just over $5.2bn of the $12.6bn seen so far today.
• In terms of the larger ticket sizes, we saw a USD put at 100.73 strike (expiry Feb next year) go through for over $200mn. We have seen a variety of other transactions go through, with USD calls at 157 and 161 for nearly $200mn. Most strike rates have been set at lower spot levels that what currently prevail though.
• For this upcoming week, the largest volume of strikes are at 145.00 (just under $2.9bn). This is followed by 154.00 ($2.8bn), then 135.00 ($2.6bn), followed by 156 to 153 region, with volumes at these strike level between $1.3bn to $1.45bn.