INDONESIA: Country Wrap: BI Independence Challenged
Market Summary: The Jakarta Composite is up +0.25% after two days of losses, yet remains down for the week whilst the Rupiah had modest gains again today, to reach 16,609 it has gained -0.16% as it continues to edge lower from last week's wides of 16,750. Front end bonds have rallied strongly on the news story challenging independence with the 5-Yr the best performer, down 4bps to 5.47% and the 10-Yr is at 6.32% (from yesterday's close of 6.33%)
- Indonesia’s finance minister once wanted to run the country’s central bank. Now, he just wants to tell it what to do. Purbaya Yudhi Sadewa, who rose from relative obscurity to become one of Indonesia’s most powerful officials, has told friends and colleagues over the years that he doesn’t believe the central bank should be independent, according to people familiar with the matter. The nation’s populist leader Prabowo Subianto agrees with him, the people said. (source The Edge)
- Finance Minister Purbaya will redo some portions of the state budget (APBN) to allocate for the year-end stimulus program. He confirmed that the budget reallocation will be imposed on the least urgent spending, and he is still monitoring and gauging the budget lines that will be affected by the initiative. (source Antara)
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OIL: Crude Continues Higher As Upcoming OPEC Meeting & US Payrolls In Focus
Oil prices have continued the rally started on Monday. WTI is up 1.4% to $64.90/bbl after reaching $65.10. Brent is 0.4% higher at $68.42/bbl after a peak of $68.58, remaining below resistance at $69.06. The prospect of a near-term easing in sanctions on Russia has faded with the US and EU now looking at extending them after attacks on Ukrainian cities have intensified. The USD index is up 0.1%.
- With the oil market expected to post a substantial surplus in 2026, supply developments are being watched closely.
- OPEC meets on September 7 to decide its October production target. There are still 1.65mbd of previous voluntary output cuts that could be unwound but analysts believe the group will hold production stable.
- Demand also remains in focus with concerns regarding the impact from increased US tariffs but the prospect of Fed easing is calming concerns. Friday’s August US payroll data will be key.
- Later the ECB’s Elderson and Machado appear. US August manufacturing PMI/ISM, July construction, euro area August CPI and July French budget data print.
EURUSD TECHS: Trend Needle Points North
- RES 4: 1.1851 High Sep 10 2021
- RES 3: 1.1829 High Jul 01 and the bull trigger
- RES 2: 1.1789 High Jul 24
- RES 1: 1.1743 High Aug 22
- PRICE: 1.1696 @ 06:08 BST Sep 2
- SUP 1: 1.1574/1.1528 Low Aug 27 / Low Aug 5
- SUP 2: 1.1392 Low Aug 1 and bear trigger
- SUP 3: 1.1373 Low Jun 10
- SUP 4: 1.1313 Low May 30
EURUSD has recovered from last week’s low. The trend set-up is bullish and short-term weakness is considered corrective. Note that the pair has pierced key support around the 50-day EMA, currently at 1.1611. A clear break of the average would signal scope for a deeper retracement and potentially expose key M/T support at 1.1392, the Aug 1 low. Key resistance and the bull trigger is 1.1829, the Jul 1 high. A breach would resume the primary uptrend.
BUND TECHS: (U5) Trading Above Its August Lows
- RES 4: 130.60 High Aug 5 and a key resistance
- RES 3: 130.26 High Aug 8
- RES 2: 130.06 High Aug 14
- RES 1: 129.74/90 50-day EMA / High Aug 28
- PRICE: 129.22 @ 05:46 BST Sep 2
- SUP 1: 129.07/128.64 Low Sep 1 / Low Aug 15 and the bear trigger
- SUP 2: 128.40 Low Apr 9
- SUP 3: 128.19 Low Mar 27 (cont)
- SUP 4: 127.83 76.4% retracement of the Mar 11 - Apr 7 bull leg (cont)
Bund futures traded lower Monday but continue to trade above their August lows. Recently, resistance at the 50-day EMA at 129.74 has been pierced. A clear breach of the EMA would signal scope for a stronger recovery within the multi-month range. This would open 130.06, the Aug 14 high. Key support and the bear trigger lies at 128.64. Clearance of this level would reinstate the recent bearish theme.
