IDR: Modest Gains Fail to Alter General Trend
- USDIDR has continued in with a modest weakening trend this week, despite starting Friday off with modest gains.
- With gains of +0.08% this morning, at 16,722 the Rupiah continues to trend just north of the 20-day EMA of 16,689.
- Momentum indicators such as MACD show that the Rupiah lacks much directional momentum at the moment, but with the Central Bank continuing to suggest rates need to be lower to support the growth goals, there seems little catalysts available to stir any positive momentum for the pair.
- For the last five trading days, the Rupiah has lost ground by -0.09%. Relative to regional peers, that is a decent result given ringgit -0.36%.
- This will be pleasing to the BI following Governor Perry Warjiyo's comments post holding rates this week noting that "the move underscores BI’s short-term focus on supporting currency stability and attracting foreign portfolio inflows." He said at a media briefing: “Our short-term focus is on rupiah stability while strengthening the transmission of monetary and macro prudential easing measures implemented so far.”
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STIR: Market Wary The RBA May Disappoint Again
RBA-dated OIS pricing is slightly firmer across meetings today.
- A 25bp rate cut in November is assigned a 64% probability (peak 80%, pre-data 38%), with a cumulative 23bps of easing (peak 25bps, pre-data 13bps) priced by year-end.
- Compared with the lead-up to previous potential cuts in this easing cycle, the market appears less certain than usual about a November 4 move.
- This caution aligns with the RBA’s pattern over the past year of easing less than what 6-month forward expectations had implied.
- Those expectations currently sit around 3.20%, compared with the cash rate of 3.60%.
Figure 1: RBA Cash Rate Vs. OIS 6M1M (6M Ago)
Source: Bloomberg Finance LP / MNI
CHINA PRESS: Trade Tension Market Volatility Could Give Investors An Entry Point
CHINA PRESS: China-EU Economic Leaders Hold Call, Discuss Rare Earths
China’s Minister of Commerce Wang Wentao told European Commissioner for Trade and Economic Security Maroš Šefčovič that China remains committed to safeguarding the security and stability of global supply chains and has consistently facilitated the rare earth approval processes for EU enterprises, according to a statement on the Ministry of Commerce website. During a video conference between the two officials, Wang reiterated China’s firm opposition to the broadening of the concept of “national security” in relation to the Nexperia case in The Netherlands. Both sides agreed to convene a session of the China-EU Export Control Dialogue Mechanism in Brussels as soon as possible.
