- USD/IDR rises for the second consecutive day to refresh one-week high.
- BI Governor Warjiyo hints at rate hikes during late 2022, Fed announced hawkish halt.
- Risk catalysts may entertain traders ahead of US Q4 Advance GDP, Durable Goods Orders.
USD/IDR stays firmer around the weekly top of $14,403, up 0.10% intraday at $14,380 during Thursday’s Asian session.
In doing so, the Indonesia rupiah (IDR) pair pays little heed to the comments from Bank Indonesia (BI) Governor Pere Warjiyo.
“Indonesia's central bank governor Perry Warjiyo said on Thursday early signs of inflation might be seen at the end of this year and would be the basis for Bank Indonesia (BI) to start considering raising its policy interest rates,” said Reuters. The news adds, “BI will rely more on bond yield differential flexibility to mitigate global spillover from tightening by the U.S. Federal Reserve while it starts ‘normalizing’ excess liquidity Southeast Asia's biggest economy,” per BI Governor Warjiyo.
The USD/IDR pair’s rejection to cheer hawkish comments from BI Governor could be linked to the US Federal Reserve’s (Fed) readiness to lift the benchmark rates amid inflation fears.
The US Federal Reserve (Fed) matched wide market expectations to keep benchmark interest rates and tapering targets intact during Wednesday’s Federal Open Market Committee (FOMC) meeting. However, the interesting part from the Monetary Policy Statement was, “The Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”
Fed Chairman Jerome Powell also spoke in sync with the hawkish signals from the US central bank while saying, “There’s plenty of room to raise rates.” Though, his comments like, “The rate-hike path would depend on incoming data and noted that it is ‘impossible’ to predict,” seemed to have probed the USD/IDR bulls of late.
Read: Fed Quick Analysis: Three dovish moves boost stocks, why more could come, why the dollar could rise
Amid these plays, the US 10-year Treasury yields remain firmer around 1.85% while the US stock futures drop over 1.0% at the latest.
Looking forward, the risk catalysts like Ukraine-Russia tussles and Sino-American tensions, not to forget virus woes, may play an important role in direct short-term USD/IDR moves, major attention will be given to the first readings of the US Q4 GDP and Durable Goods Orders for December for clear direction.
Read: US GDP Preview: Inflation component could steal the show, boost dollar, already buoyed by Russia
Technical analysis
Although sustained trading beyond the 20-DMA level of $14,330 keeps USD/IDR buyers hopeful, a clear upside break of $14,450 horizontal area should challenge the quote’s short-term advances.
