/IDR: Decent Performance From MYR & IDR, Palm Oil & Inflation Data In Focus

MYR/IDR has retraced its earlier uptick as both sides of the pair sit near the top of the Asia EM scoreboard in defiance of softer palm oil prices. The rate last deals at IDR3,319, little changed on the day.

• The rate remains trapped in an ascending channel drawn off Aug 12 low. Its ceiling is located at IDR3,325 providing the initial bullish target, with Aug 5 high of IDR3,355 coming up next.
• In a reassuring signal for bulls, the RSI returned from oversold territory earlier this month, suggesting that the rate might finding a base.
• Conversely, a retreat past channel floor (IDR3,302) and Aug 12 low (IDR3,297) would give bears a green light for targeting IDR3,284, which represents the low print of Jun 7 the the pair's lowest point since mid-2020.
• From a longer-term perspective, the rate rests upon support from a trendline drawn off the 2003 low, which now intersects at IDR3,298.
• Palm oil is weaker this morning, with the contract for November delivery last seen -MYR55 at MYR4,120/MT. There is continued focus on regional rivalry for market share. Indonesia raised its export tax reference price and increased its 2022 biodiesel allocation, while also extending the export levy waiver through end-Oct.
• Local inflation data remain in focus as some of the key hints on future monetary policy trajectories. Data released Monday showed that Malaysia's CPI growth accelerated in line with expectations last month, cementing the case for further tightening. Indonesia's August CPI report will be published on Thursday.