Indonesia political uncertainty eases a notch

The constitutional court has upheld Joko ‘Jokowi’ Widodo’s presidential victory, dismissing rival Prabowo Subianto’s accusations of fraud in the process.

Man looking at data board
Source: Bloomberg

The latest development could boost  the rupiah and the Jakarta Composite Index in the interim. We’ve started to see some positive sentiment in the currency. 

The one month Non-Deliverable Forward contracts opened this morning 0.1% higher at 11,738.

The Indonesian currency has gained around 4% year-to-date against the greenback. However, USD/IDR has been largely consolidating since the July electoral victory by Jokowi with the court decision process.

With that out of the way and less political uncertainty now, we’ll be watching out for a breakout and whether USD/IDR will weaken towards its next support level. That could be the case if it breaks below the 11,722 support level and test its next support at 11,500. 

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The nearest resistance appears to be around the 11,880 level, though the pair appears to be capped on the upside within a wedge.

Ahead of the Singapore Open

On the macro data front, we might be looking at a light trading day with investors likely to hold back ahead of the Jackson Hole symposium tonight.

The market will be watching out for Federal Reserve Chair Janet Yellen to deliver a dovish tone in light of the employment slack. If that doesn’t come through, we could see the greenback pick up. On the flipside, if her ‘lower for longer’ rhetoric comes off stronger in her speech, the dollar could drift lower.

We are calling for MSCI Singapore to open 0.03% higher at 378.65 points, and the Hang Seng 0.23% higher at 25,032.6 points.




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