Halister News

(Bloomberg) -- USD/IDR direction may be more influenced by FOMC and Brexit than Thursday’s Bank Indonesia meeting given that rates could be unchanged, Bloomberg strategist David Finnerty writes.

• BI will leave reference rate at 6.75% according to 18 of 29 economists in Bloomberg survey; 11 expect 25-bp cut
• USD/IDR showed sensitivity to Fed rhetoric last month, rallying from 13,270 on May 17 to 13,695 a week later as FOMC minutes raised likelihood of June rate hike; pair breached 13,000-13,500 range had been in since Feb. 23
  • If Fed maintains dot plan this week, could support USD strength as markets would have to reprice higher probability of hike this yr after adjustment lower on weak May payrolls
• BI’s executive director of monetary policy, Juda Agung, on May 31 said monetary stance is accommodative to support growth, room for easing is available; signaled rate cut possible but holding rates should support IDR, particularly given event risks
• Brexit referendum on June 23 may spur risk-off sentiment if leave campaign wins, weighing on IDR; Fed’s Yellen said earlier this month a vote to leave could have significant repercussions
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.