USD/IDR Testing Lower Ahead Of BI Later

USD/IDR sits up from earlier lows, last near 16135 (still +0.30% firmer in IDR terms). The pair got to 16123 in the first part of trade, which was a fresh low back to late May in the pair. Levels wise we are sub the 20 and 50-day EMAs, with the 50 near 16200, while 100-day is closer to 16050. USD/IDR has spent little time sub the 100-day EMA since Dec last year.

• The rupiah is enjoying the benefits of positive spill over from lower US nominal and real Tsy yields (the 10yr back to 1.91%, lows form late March/early April). YTD correlations between the US real 10yr yield and USD/IDR (in levels terms) is 72%.
• Focus later will very much be on the BI outcome. No change is expected, with the BI still mind of FX stability and preferring to use other means to curb rupiah volatility. See our full preview here.
• ID-US 10yr nominal Treasury spreads are comfortably off 2024 lows (around +200bps), last close to +280bps.
• Expectations of easier Fed settings should keep USD/IDR upticks sold, although offshore investor focus will remain on the fiscal outlook. Foreign ownership of local bonds is trending higher, but remains well below earlier 2024 highs.
• After the BI decision, the local data calendar is quiet until the start of August.