Indonesian rupiah in focus ahead of election

Four markets in focus today: EMFX USD/IDR, AUD/USD, US 500 Cash and Soyabeans.

Source: Bloomberg


The Indonesian rupiah, as well as the Jakarta stock market, has staged a reasonably strong rally of late on the premise Joko Widodo (also known as Jokowi) will win today’s Indonesian election. Jokowi’s opponent is Prabowo Subianto, a former general, who many feel with utilise government to have a stronger hand in the running of the economy and foreign investment. Naturally there are some sizeable differences in both candidates’ fiscal policies, but clearly the market’s preferred candidate is Jokowi. The polls are neck and neck, so we could see heightened volatility in the IDR today. A firm win for Jokowi could see USD/IDR test the March 17 low of 11,254 in the coming weeks.


AUD/USD has regained the January uptrend, and with US bond yields falling six basis points overnight, traders will continue to focus on yield thus the AUD should find support. At 10:30am today we get Westpac consumer confidence. This index has fallen 16% since September, with those surveyed affected by the budget among other factors. A rebound in the confidence index could be positive for the AUD. Long positions are preferred with a medium-term target of 0.9580. China’s CPI at 11:30am shouldn’t affect markets too much.

US 500 Cash

Traders took profits in long equity positions overnight and the cries from the bears that a pullback of a five to ten per cent could be upon us have increased. The trend is still higher, however a break of 1947 (the April 14 uptrend) could suggest a deeper pullback is on the cards. The 14-day RSI is testing is threatening to break the low range from June 12 and this could also be telling. Interestingly the front page of the FT highlights that hedge funds have scaled back short positions to the lowest since the Lehman brothers collapse.

Soyabeans (November)

Soyabean prices have fallen for seven consecutive days, which in fact is the longest run in five years. The commodity has been savaged since April 17 as traders focus on strong crop yields in the US. A simple look at the RSI’s shows the Soybeans are oversold, so look for signs of a reversal could be due. However moves in some of the agricultural commodities have been aggressive of late and anyone looking for trends could focus in this space.

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