Mixed economic data weigh on Indonesian Rupiah

• $3.36 billion was Indonesia’s trade surplus in September. Export growth accelerated to 11.87% year-on-year.
• 3.23% was October’s domestic inflation rate, a slight decline that left it within Bank Indonesia’s target range.
• 75% odds of a Fed rate hike underpin dollar strength, although easing Middle East tensions capped USD gains.

18,180 is the level around which USD/IDR is trading during Monday’s Asian session. The pair advanced after two days of declines as the Indonesian Rupiah (IDR) stayed subdued following mixed domestic economic releases. Strong headline trade figures showed Indonesia’s September surplus at USD 3.36 billion, well above the USD 1.9 billion expected by the market. Annual export growth accelerated from August’s 6.72% to 11.87%, substantially exceeding the 6.45% forecast.

September imports rose 18.41% year-on-year, below the projected 20.83% increase and the slowest pace since March. Divergent energy trends contributed to the slowdown. Higher purchases of refined oil products lifted oil and gas imports by 23.94% year-on-year, whereas crude oil imports declined 7.00%. Domestic annual inflation, meanwhile, eased to 3.23% in October after reaching a three-month high of 3.28% in September. Below the market forecast of 3.29%, the reading remained comfortably inside Bank Indonesia’s 1.5% to 3.5% target range.

Reduced demand for safe havens is weighing on the US Dollar (USD), potentially capping USD/IDR’s upside despite Rupiah weakness. Efforts to resolve the Middle East conflict before the US midterm elections entered a third consecutive day of talks between Qatari and Iranian officials. The discussions eased geopolitical tensions, counterbalancing persistent concerns about renewed US military action against Iran.

Rising expectations of a Federal Reserve interest rate increase nevertheless leave scope for a US Dollar recovery. Traders assign approximately a 75% probability to a December rate hike, according to the CME FedWatch Tool. Recent resilient US macroeconomic readings and sustained inflationary pressures have driven that pricing.

101.00 support in focus as tech sell-off pressures Dollar; Fed backing persists

Near-term Dollar weakness is likely to persist as the technology sell-off continues, according to Brown Brothers Harriman’s Elias Haddad, with “the USD index (DXY) likely to test support at 101.00.” He nevertheless emphasises that “strong US economic activity and rising price pressures reinforce the Fed’s hawkish bias, keeping rate differentials supportive of USD,” indicating that fundamentals remain a significant source of support for the currency despite worsening risk sentiment.