IDR: USDIDR Nears Overbought on RSI
Dec-22 04:19
- USDIDR is higher by +35 today to and is near 16,785 / 16789 in a weak start to Monday trading.
- The Rupiah has lost -0.19% this morning and is down over -0.69% in the last week.
- Last week the Central Bank left rates on hold at 4.75% citing the need to 'maintain the stability of the rupiah'. Despite this, the Rupiah has lost ground each trading day since.
- There are some signs of erosion of FX reserves, though by historical standards they remain very high. BI policies have been more traditional in nature when compared to other regional peers namely monetary policy stability and FX intervention at spot and forward.
- The BI has seen regional peers announce policies in attempt to strengthen their currencies with the Bank of Korea (BOK) announcing a package of measures on December 19 to boost the onshore supply of U.S. dollars and stabilize the won. The measures were designed to enhance foreign exchange market liquidity without direct intervention in the spot market.
- The Reserve Bank of India (RBI) recently engaged in aggressive dollar sales in the foreign exchange market and implemented various measures to internationalize the rupee and boost foreign inflows, and move hoped to stop the currency that had fallen over 5% year to date prior to the announcement.
- With this morning's move, USDIDR is now approaching overbought on the 14-day relative strength index, we were last near at the start of November.
- The BI has put faith in the GDP growth outlook to resurrect the fortunes of the rupiah yet based on the movements since the Central Bank meeting last week, they may need to look at less traditional policies in the new year.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
RATINGS: Moody's Upgrades Italy To Baa2 From Baa3, Still A Notch Below Others
Nov-21 21:46
The Moody's upgrade to Italy's credit rating announced late Friday was the first from the agency since 2002 but shouldn't be considered a major surprise. Among the 3 major ratings agencies, Moody's had the lowest rating on Italy - by two notches (Fitch and S&P both BBB+).
- So this upgrade to Baa2 from Baa3 represents something of a closing of that gap rather than a major breakthrough for Italy.
- From the release:
- "The rating upgrade reflects a consistent track-record of political and policy stability which enhances the effectiveness of economic and fiscal reforms and investment implemented under the National Recovery and Resilience Plan (NRRP). It also points to prospects of further policy actions supporting growth and fiscal consolidation beyond the plan's deadline in August 2026. As a result, we expect that Italy's high government debt burden will gradually decline from 2027 onwards."
FED: Heading Into Its Final Weeks, QT Pace Remains At $20B/Month (2/2)
Nov-21 21:03
On the asset side of the Fed balance sheet, we saw a $25B drop in assets, of which just $2B could be attributed to QT in one of its final weeks (ends Dec 1).
- Instead it was a $6B drop in dealer repo operations vs a week earlier, and $17B in "other" areas that aren't related directly to monetary policy and typically don't have any significant impact on the size of the balance sheet (such changes are largely due to items such as bank premises, accrued interest, and other accounts receivable.)
- Discount window takeup edged up $0.3B to $6.1B but remains relatively low.
- QT has totaled just under $21B over the last month, around the expected pace, though as noted this will flatline in December with a pickup in net bills as MBS proceeds are rolled over into T-bills.
LOOK AHEAD: US Week Ahead: Retail Sales, PPI & Claims Headline Thanksgiving Week
Nov-21 21:01
A Thanksgiving-condensed week sees data highlights from delayed retail sales and PPI reports for September on Tuesday (Nov 25) before a Wednesday release for weekly jobless claims (Nov 26). Aside, the Fed’s Beige Book should also offer another important update on Wednesday for latest liaison reporting, with no Fedspeak currently scheduled around the holiday and the FOMC media blackout due to start on Saturday, Nov 29.
- As we regularly comment in this weekly publication, Redbook and Chicago Fed CARTS indicators point to solid nominal growth in retail sales, something broadly reflected in analyst consensus for the release.
- PPI inflation will offer a useful albeit not overly timely update on input cost pressures.
- Jobless claims will be watched particularly closely, both for latest initial claims for signs of layoffs and a notable update for continuing claims. The latter covers the payrolls reference period for November and will be an important reference point for FOMC members trying to get a sense of latest unemployment rate clues with the next payrolls reports coming after the Dec 9-10 FOMC decision (going into it with this week’s 0.12bp rise to 4.44% back in September).
