EUR: EUR/USD - Looking To Challenge Pivotal 1.1400 Support As USD Bounce Extends

*JAPAN 20Y GOVT BOND AUCTION MAY HAVE 96.15 LOWEST PRICE:POLL – BLOOMBERG

BUY 3799 of TYM6 traded at 108-23+, post-time 13:01:31 AEST (DV01 $243,590). The contract closed at 108-22+, 0-00.

Bloomberg consensus is split 25/15 between a 25bp hike and no change at today’s Bank Indonesia (BI) decision. It may feel it has some room to tighten policy to support the rupiah given stronger-than-expected Q1 GDP and there is material fiscal easing. Also, it can support the economy through macroprudential policies which it has been doing for some time, especially with the weak transmission of 2025’s monetary easing.

• The uncertain economic outlook due to the Iran War and subsequent rise in global oil prices may still keep BI on hold this month.
• The S&P Global PMI reported that manufacturing activity shrank in April with external demand contracting substantially in the PMI report signalling that the global environment is highly uncertain. The 12-month outlook remained optimistic but at its lowest level since November.
• On a more positive note, April consumer confidence suggests steady spending growth into Q2. Private consumption picked up 0.4pp to 5.5% y/y.

Mixed Indonesian economic outlook

Source: MNI - Market News/LSEG/Bloomberg Finance L.P.

• Q1 GDP was stronger than expected rising 5.6% y/y up from Q4’s 5.4% with the domestic economy supporting growth while real exports of goods and services up only 0.9% y/y. Investment was stable around 6% y/y.
• Government expenditure jumped 21.8% y/y, the fastest since the series began in 2011, and it is fiscal developments such as these that are contributing to the selling of the rupiah. In terms of the economic outlook, public demand is likely to remain supportive.

Indonesia GDP y/y%

Source: MNI - Market News/LSEG