INDONESIA: Country Wrap: BI on Hold with Eyes ON Rupiah.
- Late yesterday we had the no change decision from BI, which provided some relief for the rupiah but follow through has been very limited. Sell-side analysts see the BI outlook being somewhat dependent on how USD/IDR trends evolve (per BBG). This comes after the earlier decision this year by BI to cut rates despite rupiah weakness, which left the market questioning whether BI policy goals were shifting away from financial stability and more towards growth. Yesterday's hold decision is likely giving some providing some relief rupiah stability is still a focus point. (source: MNI – Market News)
- Indonesia’s Energy Minister indicated that the current ban on export of copper and copper concentrates will be gradually relaxed. (source: BBG)
- Indonesia’s Central Bank (the BI) purchased IDR33.4tn of government bonds month to date in a statement released by the Governor (source: BI).
- The Jakarta Composite was one of the better regional performers today, flat on the day as peers were lower.
- IDR: the rupiah was one of the few regional peers that fell today, down marginally at 16,336 a fall of -0.06%.
- Bonds: the bond market responded well to the BI decision with the INDOGB 10YR at 6.80% (-1.5bp lower).
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EURUSD TECHS: Pierces Trendline Resistance
- RES 4: 1.0630 High Dec 06
- RES 3: 1.0568 High Dec 10
- RES 2: 1.0461 50-day EMA
- RES 1: 1.0437 High Jan 6
- PRICE: 1.0379 @ 05:59 GMT Jan 21
- SUP 1: 1.0260/0178 Low Jan 15 / 13 and the bear trigger
- SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 3: 1.0097 2.0% 10-dma envelope
- SUP 4: 1.0031 2.000 proj of the Sep 25 - Oct 23 - Nov 5 price swing
The latest recovery in EURUSD appears corrective, however, the pair has breached the 20-day EMA, at 1.0346, and pierced trendline resistance at 1.0393, drawn from the Sep 30 ‘24 high. A clear breach of the line would expose the 50-day EMA at 1.0461. Clearance of this average would strengthen a bullish condition. Key support and the bear trigger is at 1.0178, the Jan 13 low. The medium-term trend condition remains bearish.
BUND TECHS: (H5) Corrective Cycle
- RES 4: 137.75 Low Dec 10
- RES 3: 135.15 High Dec 13
- RES 2: 132.41 20-day EMA
- RES 1: 132.15 Intraday high
- PRICE: 132.03 @ 05:37 GMT Jan 21
- SUP 1: 131.00 Low Jan 16
- SUP 2 131.00/130.28 Low Jan 16 / Low Jan 15 and the bear trigger
- SUP 3: 130.44 Low Jul 5 ‘24 (cont)
- SUP 4: 130.23 Low Jul 3 ‘24 (cont)
The Jan 15 rally in Bund futures highlighted a short-term reversal signal - a bullish engulfing candle. It suggests scope for a continued corrective phase that is also allowing an oversold trend condition to unwind. A continuation higher would open 132.41, the 20-day EMA. The medium-term trend is unchanged, it remains bearish. The bear trigger has been defined at 130.28, the Jan 15 low, a break would resume the downtrend.
CHINA: Country Wrap: Trump Delays Tariffs
- President Donald Trump held off unveiling China-specific tariffs on his first day in office, instead ordering his administration to address unfair trade practices globally and investigate whether Beijing had complied with a deal signed during his first term. (source: BBG).
- President Xi Jinping called for China to implement more proactive macroeconomic policies this year to maintain growth momentum as the world’s No. 2 economy could be facing new US tariffs. (source:BBG).
- China will promote Zou Lan, head of the monetary policy department at the People’s Bank of China, to deputy governor of the central bank, Reuters reports (source: BBG).
- China’s major equity bourses had a mixed day today with the Hang Seng up +1.05%, CSI 300 up +0.08%, Shanghai down -0.10% and Shenzhen down -0.10%.
- CNY: Yuan Reference Rate at 7.1703 Per USD; Estimate 7.2934
- Bonds: China’s 10YR saw yields lower today at 1.674%.
