USD/IDR Continues To Recover, BI Seen Firmly On Hold Later

USD/IDR has firmed again, the pair around 14865. This is around levels the pair broke lower through last week and also coincided with previous YTD lows in early February. The rupiah has lost around 0.50% so far in trading today. This is line with USD gains elsewhere, with the firmer yield backdrop dominating for now.

• In terms of upside levels, the 20-day EMA sits at 14966, while on the downside we are more than 200IDR above lows from late last week at 14645.
• The rebound in US real yields is weighing on broader risk momentum. Indonesia 5yr CDS is has stabilized somewhat, while inflows into local bonds have been more modest in the first half of April +$265.3mn).
• Palm oil prices are firmer, but largely remain range bound. Markets will be watching if the authorities boost the palm oil export quota. This was mentioned last week and could boost USDs held onshore if export volumes increase, via the deposit channel.
• Still, sentiment in the near term is likely to be dictated by the US yield/Fed backdrop. We still have the BI decision later, but all forecasters expect an on hold outcome (see our full preview here).