Rupiah jumps to three-week high near $14,500 after Indonesia inflation

  • USD/IDR takes offers to snap three-day uptrend, drops to the multi-day low.
  • Indonesia Inflation eased in May, Core Inflation also dropped below forecasts.
  • US dollar retreat, mixed sentiment enable sellers to take controls.

USD/IDR stands on slippery ground near a three-week low even as Indonesia’s inflation softened in May. In doing so, the Indonesia rupiah (IDR) pair drops to $14,495, the lowest level since May 11, while posting the first daily negative in four days ahead of Thursday’s European session.

Indonesia Inflation eased to 0.4% MoM in May, from 0.41% forecast and 0.95% prior. The YoY figures also softened to 2.58% from 2.7% expected and 2.6% prior. It’s worth noting that the Core Inflation rose beyond 3.47% in previous readings but stayed below the market consensus of 3.6% while posting 3.55% figures for the stated month.

“Indonesia’s inflation rate accelerated slightly in May to 3.55% due to rising food prices and rates, official data showed on Thursday, roughly in line with market expectations and within the central bank’s target range,” said Reuters following the data release.

The pair’s latest weakness could be linked to the US dollar’s pullback from a one-week high. That said, the US Dollar Index (DXY) retreats from a seven-day top to 102.53 at the latest while consolidating the biggest daily gains since early May.

The greenback’s consolidation portrays the market’s anxiety ahead of the US ADP Employment Change for May, expected at 300K versus 247K prior. Also likely to have challenged the USD/IDR prices could be the downbeat performance of Asian markets, with Indonesia’s benchmark IDX Composite falling 0.20% intraday by the press time.

Technical analysis

A two-week-old descending trend line around $14.570 by the press time, directs USD/IDR prices towards the 50-DMA support of $14.475.

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