Inflation Data Eyed

Spot USD/IDR is rangebound and last trades at IDR14,265, a few figs lower on the day, after printing its worst levels in two and a half months. Bears look for a deeper sell-off past Jun 11 low of IDR14,185. Conversely, a recovery above Aug 27 high of IDR14,445 would clear the way to Aug 20 high of IDR14,473.

• USD/IDR 1-month NDF last +47 figs at IDR14,297. Topside focus falls on Aug 4 low of IDR14,323, followed by Aug 26/27 highs of IDR14,522. Meanwhile, bears see yesterday's low of IDR14,243 as their initial target and a break here would expose Jun 11 low of IDR14,198.
• Indonesia's manufacturing sector remained deep in contraction in August, even as its pace decreased a tad, with Markit M'fing PMI edging higher to 43.7 from 40.1 recorded in July. IHS Markit noted that "the Indonesian manufacturing sector continued to be affected by the second COVID-19 wave in August, and to a severe extent," but "things appear to be improving from July in line with the decline in COVID-19 cases in Indonesia".
• Moody's warned Tuesday that the recent virus wave will weigh on economic recovery and undermine the government's plan to trim fiscal deficit, which will be "a credit negative".
• Indonesian CPI report will be published later today, with BBG consensus pointing to a 1.60% annual growth in headline price index. Bank Indonesia estimated Aug CPI at +1.57% Y/Y in its weekly survey conducted in the fourth week of the month.
• Out Policy Team have published an INSIGHT story on Bank Indonesia's bond purchases and their implications for the currency.