Rupiah Lagging Weaker Dollar Backdrop, Core CPI Backs BI On Hold View

USD/IDR is slightly higher in the first part of trade, nudging back above the 15250 level. The currency isn't enjoying any positive spill over from lower USD/IDR levels elsewhere in the region. It is also at odds with the better tone to regional equities, although the JCI is only a touch higher for the session so far. The 100-day EMA at 15268 remains on a cap on the topside. The simple 50-day MA is also close to this level.

• Jan CPI data, which has just printed, is painting a picture that is consistent with the BI's view of no further rate hikes. Headline inflation was a touch firmer (5.47% y/y, versus 5.42% expected), but core came in at 3.09% y/y (3.24% forecast).
• Bi Governor Warjiyo stated the central bank didn't see the need for further rate hikes. He stated it will focus on maintaining attractive yield differentials to support the currency. This will presumably be done by operation twist.
• Yield differentials with the US are close to recent lows across the 2-10yr part of the curve. This may be weighing on IDR at the margin today.