IDR: USD/IDR Testing Key Tech Support Levels as USD Weakness Returns
- Strong regional gains against the USD has seen USDIDR test a key resistance level this morning. USDIDR opened at 16,773 and has traded in a 16,764 - 16,778 range and is currently near 16,764 / 16,775 on USD weakness.
- We are testing 50-day EMA support a break below now brings the 100-day EMA into play at 16,702 . Still, moves under the 50-day EMA have bene very short lived going back to Sep last year.
- Yesterday FTSE Russell said that it will postpone a review planned for March following feedback from an advisory committee and considering "adverse turnover and the uncertainty in determining the accurate free float percentages of Indonesian securities." FTSE Russell will freeze new entrants to benchmarks nor any adjustment to existing. This comes on the back MSCI announcement, creating uncertainty for Indonesia stocks and risk sentiment in general.
- IDR is close to flat month to date versus the USD, and down 0.50% YTD, one of weaker performers in EM Asia in 2026 to date.
- Still, risk sentiment in Indonesia today is good with the JCI up +0.50% and bond yields lower by 1 to 1.5bps following global leads. This is likely aiding IDR, but it remains to be seen how much follow through there is.
- Yesterday the BI deputy governor quoted low inflation as a supportive factor for further rate cuts. Short term momentum indicators are broadly neutral leaving USDIDR vulnerable to USD moves.
Source: Bloomberg Finance L.P/MNI
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USD: BBDXY - Knee-Jerk Lower To Start The Week On FED News
The BBDXY range Friday night was 1209.18 - 1213.00, Asia is currently trading around {BBDXY Index}. The USD was looking like it was reestablishing some upward momentum to start the year, but this morning's news of possible indictments on the FED have put a dent in that for now. The market's perception is that this is clear political pressure being brought to bare on the FED and so has worrying implications for its so-called independence. The USD has understandably had a knee-jerk lower in Asia, the question is if that move is enough considering what's at stake. On the day, I suspect rallies could remain heavy in the short-term as the market tries to work through what this means. First support is back between 1205-1207, the USD has lacked any clear direction for at least 6 months now and the wider 1185-1230 range looks set to continue for now. This lack of a trend is being reflected in the CFTC data which shows very little positioning in the USD to start the year.
- The Market Ear on X - "US flip from exceptionalism to expansionism is best case for a contrarian US dollar long" (Hartnett)
- Barchart on X - “Google Searches for Dollar "Debasement" soared last quarter to the highest level in history.”
- CFTC Data last week shows Asset managers turning slightly entering the first quarter, -1318(Last +1168). The Leveraged community has turned slightly long after rapidly reducing its short into the end of year, +821(Last +45).
- The BBDXY Average True Range for the last 10 Trading days: 381 Points
Fig 1: USD Index CFTC Data
Source: MNI - Market News/Bloomberg Finance L.P
CHINA PRESS: China Polysilicon Sentiment Weakens
China’s polysilicon market sentiment has weakened sharply after authorities fully scrapped value-added tax export rebates for photovoltaic products and reportedly tightened self-discipline mechanisms following regulatory talks, Yicai reports. Sources said regulators have recently warned major firms of potential antitrust risks, laid out explicit rectification requirements and demanded concrete corrective actions. Authorities said companies must not coordinate on capacity, utilisation rates, production or sales volumes, or pricing. Firms must not divide markets, allocate output, or share profits in any form, nor coordinate on current or future prices, costs, or production and sales plans.
CHINA PRESS: China To Promote Interest Rate Subsidies For SMEs
China will prioritise support for private investment by optimising an interest subsidy program for loans to small, medium, and micro enterprises, aimed at reducing corporate financing thresholds and costs, according to a recent State Council executive meeting. Local governments such as Beijing and Shenzhen have already rolled out similar interest subsidy policies for SMEs, primarily targeting innovative firms. In Beijing, for example, companies can receive subsidies covering 20% of the interest incurred on their first loan within one year from the date of the initial disbursement, with the total subsidy capped at 1% of the actual loan amount. The meeting described these measures as a critical step toward expanding effective demand and advancing macroeconomic policy innovation.
