IDR: Rupiah Softens As Palm Oil Slips, CDS Unwinds Some Tightening, CPI Data Eyed
Spot USD/IDR has added 38 figs thus far and last changes hands at IDR14,870. Bulls need a rally above Jul 22 high of IDR15,038 to regain control. Meanwhile, bears keep an eye on the nearby 50-DMA, which kicks in at IDR14,810.
- USD/IDR 1-month NDF last seen +18 figs at IDR14,871. Topside focus falls on Jul 21 high of IDR15,133, followed by Jul 15 cycle high of IDR15,190. On the flip side, should we get below the 50-DMA (IDR14,829), bears could take aim at Jun 27 low of IDR14,788.
- Indonesia's CDS premium (monitored by Bank Indonesia as a gauge of rupiah vulnerability) tightened sharply from its 164bp peak in mid-July but has recoiled from multi-week lows this morning. It has widened ~17bp today and last sits at 116bp.
- Palm oil futures slipped from Friday's peak today. The most active contract traded in Kuala Lumpur trades -MYR119.00 at MYR4,170/MT when this is being typed.
- Indonesia's manufacturing sector expanded at a faster pace in July, the latest S&P Global M'fing PMI survey showed. Headline index climbed to 51.3 from 50.2 recorded in June. The authors of the survey pointed to the encouraging news that "July saw a softening of price pressures" across both "cost burdens and selling prices," albeit "upside risks to price rises remain."
- The latest set of Indonesia's CPI figures will be published at the top of the hour. Headline inflation is expected to have quickened to +4.82% Y/Y in July from +4.35% prior. With price growth driven primarily by supply-side factors, Bank Indonesia is currently putting more emphasis on underlying dynamics. Participants in a Bloomberg survey expect core CPI to print at +2.86% Y/Y, up from June's +2.63% but below the +3.0% mid-point of Bank Indonesia's target range.
- Later this week, focus turns to Q2 GDP, due for release on Friday.
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Historical bullets
JGB TECHS: (U2) Solid Bounce Into the Close
- RES 3: 151.13 - High Mar 3
- RES 2: 150.44 - High Mar 14
- RES 1: 150.14 - High Apr 1 and key resistance
- PRICE: 149.30 @ 16:43 BST Jul 1
- SUP 1: 147.15 - Low Jun 14
- SUP 2: 147.08 - 3.0% Lower Bollinger Band
- SUP 3: 146.82 - Low Jul 14 2015
JGBs extended the near-term corrective bounce into the Friday close, persisting with the recovery off last week’s lows. The broader outlook, however, remains negative after JGB futures showed below the 1.0% 10-dma envelope for the first time since the depths of the COVID-19 crisis, touching 147.15 on the pull lower. The next downside level crosses at 147.08, the 3.0% lower Bollinger Band ahead of 146.82 - the low from July 14th 2015.
USDCAD TECHS: Bullish Price Structure
- RES 4: 1.3192 1.00 proj of the Apr 5 - May 12 - Jun 8 price swing
- RES 3: 1.3113 High Nov 23 2020
- RES 2: 1.3079 High May 17 and a bull trigger
- RES 1: 1.3017 High Jun 23
- PRICE: 1.2918 @ 16:59 BST Jul 1
- SUP 1: 1.2819/2807 Low Jun 28 / 50-day EMA
- SUP 2: 1.2732 61.8% retracement of the Jun 8 - 17 rally
- SUP 3: 1.2681 Low Jun 10
- SUP 4: 1.2518 Low Jun 8 and key support
USDCAD outlook remains bullish and the pair is trading above this week’s low. The recent corrective cycle appears to have stalled at Tuesday’s low of 1.2819. Looking at Japanese candle patterns, Tuesday is a doji pattern and this points to a short-term bullish reversal. A stronger recovery would refocus attention on resistance at 1.3079 the Jun 17 and a bull trigger. Firm support lies at 1.2807, the 50-day EMA.
AUDUSD TECHS: Clears Key Support
- RES 4: 0.7202 High Jun 9
- RES 3: 0.7138 High Jun 10
- RES 2: 0.7069 High Jun 16 and a key short-term resistance
- RES 1: 0.6979 20-day EMA
- PRICE: 0.6794 @ 16:56 BST Jul 1
- SUP 1: 0.6764 Low Jul 1
- SUP 2: 0.6759, 50.0% retracement of the Mar ‘20 - Feb ‘ 21 bull cycle
- SUP 3: 0.6685 High Mar 9 2020
- SUP 4: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
AUDUSD is softer and the pair has traded below its key short-term support at 0.6829, the May 12 low. The break of this support confirms a resumption of the downtrend that started in February 2021 and maintains a broader bearish price sequence of lower lows and lower highs. The move lower signals scope for weakness towards 0.6759, the 50.0% retracement of the Mar ‘20 - Feb ‘ 21 bull cycle.
