INDONESIA: Country Wrap: Minister Confident on Growth
Market Summary: The Jakarta Composite fell by -0.77% yesterday and is barely positive today, up +0.10% whilst USDIDR is weakening by -0.20% USDIDR is at 16,697 moving back towards over sold territory on the relative strength index. Bonds are well supported with the 10-Yr down 2bps at 6.34%.
- Investment and Downstreaming Minister has set a target for investment from European Union countries to grow by 20 percent annually following the signing of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA). He said investment growth had averaged around 15 percent a year between 2020 and 2025, with a total value of about US$14.5 billion. (source Antara)
- Coordinating Minister for Economic Affairs is confident that several factors will support 2025 economic growth, including positive government spending, steady investment, and the disbursement of a stimulus package in the fourth quarter. "First, we see government spending will be positive. That's good. Secondly, we monitor investment, and it's going in according to plan. Third, the stimulus disbursed in the fourth quarter is nearing US$2 billion, about Rp30 trillion. Of course, it's really helpful," he said here on Tuesday. (source Antara)
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EURUSD TECHS: Primary Trend Condition Is Bullish
- 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: 1.1710 @ 06:07 BST Sep 1
- 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 pullbacks are considered corrective. Note that the pair has pierced key support around the 50-day EMA, currently at 1.1607. 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 at 1.1829, the Jul 1 high. A break would resume the primary uptrend.
BUND TECHS: (U5) Resistance At The 50-Day EMA Remains Intact
- 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: 129.77/90 50-day EMA / High Aug 28
- PRICE: 129.38 @ 05:45 BST Sep 1
- SUP 1: 129.15/128.64 Low Aug 26 / 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 continue to trade above their August lows. Resistance at the 50-day EMA, at 129.77, has recently 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.
OIL: Crude Continues Trending Lower As Global Output Remains The Focus
After falling close to a percent on Friday, oil prices have trended lower again during today’s APAC trading as risk appetite softened and expected excess supply going forward weighed. WTI is down 0.4% to $63.73/bbl after a trough of $63.66. Brent is 0.4% lower at $67.18/bbl after falling to $67.12. The USD index is little changed.
- OPEC+ will meet on September 7 to decide its October production target. There are still 1.65mbd of previous voluntary output cuts that could be unwound. The market is already very nervous about the increase in OPEC supply announced to date and will watch the outcome of the meeting closely.
- Progress towards a Ukraine peace deal appears to have stalled and with it any chance of an easing of sanctions on Russia. Last week the US imposed a 25% punitive tariff on India for continuing to buy Russian crude. It is attending the summit in China and PM Modi is scheduled to meet with President Putin on Monday.
- The focus of the week is likely Friday’s US August payrolls release with Bloomberg consensus expecting a 75k rise in jobs but the unemployment rate rising 0.1pp to 4.3%.
- The US is closed for a holiday today. Later ECB President Lagarde speaks and ECB’s Schnabel and Cipollone appear. European August manufacturing PMIs and euro area July unemployment are released.
