USD/IDR stays under pressure ahead of Indonesia trade numbers

• USD/IDR extends previous losses amid receding geopolitical risks in Indonesia.
• Trade positive headlines also favor the Indonesian rupiah (IDR) ahead of October month statistics.

With the Indonesian geophysics agency lifting tsunami alert after a major earthquake, USD/IDR remains on the back foot while taking rounds to 14,075 during early Friday. Indonesian trade balance numbers are of immediate concern to the pair traders.

The pair behaved violently on Thursday as traders struggled to justify a 7.1 magnitude earthquake near Indonesia’s Moluccas islands and then a lift to tsunami alert releasing some tension. The daily closing, however, turned on red with the US dollar’s (USD) broad weakness and renewed optimism surrounding the US-China trade deal.

Comments from the White House Economic Adviser Larry Kudlow, as well as an anonymous Chinese trade source cited by the Fox reporter, signal trade positive sentiment surrounding the US-China phase one deal. The United States (US) shows readiness to extend waivers for doing business with China’s Huawei while the dragon nation welcomes US poultry.

Dody Budi Waluyo, Bank Indonesia’s (BI) Deputy Governor, believes current economic data still allows for an accommodative monetary policy, as said by Reuters on Monday, whereas the Jakarta Post recently cited inflation, trade and investment to be the reasons behind the BI’s four consecutive rate cuts.

While optimism in Asia, mainly due to the trade risk reset, is likely exerting downside pressure on the pair, October month trade statistics from Indonesia will be the key to watch for fresh direction. The forecast suggests $-0.28B Trade Balance versus $-0.16B prior. Further, Exports could decline further to -8.38% from -5.74% while Imports could also follow the suit with a whooping -16% drop from -2.41% prior.

Technical Analysis

Lows marked July and September, around 13,880, contrast a three-month-old falling trend line, now at 14,210, to limit the pair’s near-term moves.