IDR: USD/IDR Consolidates Ahead Of The BI Decision, Correlations Stronger With US Yields
*Corrected reference day in first paragraph
USD/IDR spot appears to be consolidating near recent highs the pair last near 16250, little changed for Tuesday so far. The 1 month NDF is just above 16260, comfortably off recent highs, but also not showing signs of dramatic mean reversion. Note for this pair the 20-day EMA continues to trend higher and was last near 16071.5. Recent highs were marked at 16366.
- Near term focus rests with tomorrow's BI outcome. No change is expected by the consensus although several sell-side forecasters are expecting a 25bps hike to curb rupiah depreciation pressures.
- How much a hike curbs IDR weakness remains to be seen. USD/IDR correlations are positive with Indonesian yield movements in the past year at +54% (based off the 10yr yield and using weekly correlations). Intuitively we would expect the opposite to hold, but Indonesian yields are mostly likely following broader US yield direction over this period. USD/IDR correlations with US 10yr yield moves over the past year is around +53%. This suggests US yield shifts will hold move sway on IDR direction.
- Offshore portfolio flows remain a headwind for IDR. So far this month we have seen just over $800mn in equity outflows, while bond flows have been -$460mn (up until the 19th of April).
- 5yr CDS is off recent highs, but is comfortably above recent lows.
- Beyond tomorrow's BI announcement the data calendar is quiet until early May (when CPI and PMIs print).
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Resistance Remains Exposed
- RES 4: 1.3729 76.4% retracement of the Nov 1 - Dec 27 bear leg
- RES 3: 1.3661 High Nov 27
- RES 2: 1.3623 61.8% retracement of the Nov 1 - Dec 27 bear leg
- RES 1: 1.3614 High Mar 19 and bull trigger
- PRICE: 1.3600 @ 15:41 GMT Mar 22
- SUP 1: 1.1.3420 Low Mar 8 and the bear trigger
- SUP 2: 1.3359 Low Jan 31 and key S/T support
- SUP 3: 1.3343 Low Jan 12
- SUP 4: 1.3288 Low Jan 5
USDCAD is trading higher but for now, remains below its recent highs. Key short-term resistance has been defined at 1.3614, the Mar 19 high. A break of this level would confirm a resumption of the uptrend that began on Dec 27. This would expose 1.3623, a Fibonacci retracement, and 1.3661, the Nov 27 high. Key support has been defined at 1.3420, the Mar 8 low. A break would be bearish.
AUDUSD TECHS: Bearish Price Action
- RES 4: 0.6729 High Jan 12
- RES 3: 0.6708 61.8% retracement of the Dec 28 - Feb 13 bear cycle
- RES 2: 0.6668 High Mar 8 and the bull trigger
- RES 1: 0.6570/6635 50-day EMA / High Mar 21
- PRICE: 0.6522 @ 15:40 GMT Mar 22
- SUP 1: 0.6504 Low Mar 19
- SUP 2: 0.6478 Low Mar 5
- SUP 3: 0.6443 Low Feb 13 and the bear trigger
- SUP 4: 0.6412 76.4% Fibonacci retracement for Oct - Dec upleg
AUDUSD has reversed lower in line with a recovery in the USD. The move lower reinstates a bearish threat and attention is on support at 0.6478, the Mar 5 low. A break of this level would expose the key support and bear trigger at 0.6443, the Feb 13 low. Moving average studies continue to highlight a short-term downtrend. Initial resistance is at Thursday’s 0.6635 high.
EURJPY TECHS: Trend Outlook Remains Bullish
- RES 4: 167.45 1.382 proj of the Jan 2 - 19 - Feb 1 price swing
- RES 3: 166.46 1.236 proj of the Jan 2 - 19 - Feb 1 price swing
- RES 2: 166.00 Round number resistance
- RES 1: 165.35/67 High Mar 20 / 2.0% 10-dma envelope
- PRICE: 163.66 @ 15:38 GMT Mar 22
- SUP 1: 162.60 20-day EMA
- SUP 2: 161.39 Trendline drawn from Dec 7 low
- SUP 3: 160.22 Low Mar 11
- SUP 4: 159.47 Low Feb 8
The EURJPY uptrend remains intact following this week’s move higher and the latest pullback is considered corrective. The cross has traded through 164.30, the Nov 16 ‘23 high and the medium-term bull trigger. This confirms a resumption of the long-term uptrend. The break higher opens 165.67, the top of a MA envelope, and the 166.00 handle further out. Initial firm support lies at 162.60, the 20-day EMA.
