The USD/IDR exchange rate moved sideways on Friday after the latest Indonesia GDP data and ahead of the latest US non-farm payrolls (NFP) numbers. The USD to Indonesian rupiah pair was trading at 14,660, which was over 5% below the highest level in March.
Indonesia GDP and US NFP
The main forex news moving the USD/IDR exchange rate was the Federal Reserve decision, which we wrote about here. In its May meeting, the bank decided to hike interest rates by 0.25%, pushing the official cash rate to 5.25%. This is the highest level that American interest rates have been at in more than a decade.
The next key USD news will come on Friday when the US publishes the latest non-farm payrolls (NFP) data. Economists expect the data to show that the labor market continued slowing down in April. Precisely, they expect the data to show that the economy added 180k jobs in April after adding 236k in the previous month.
A report by ADP revealed that the private sector added over 296k jobs. Therefore, there is a likelihood that the official numbers will be higher than estimates. The unemployment rate is expected to come in at 3.6% while the average hourly earnings are expected to come in at 4.2%.
While these numbers are important, their impact on the USD/IDR will likely be limited since the Fed has likely ended its hiking cycle. Analysts believe that the bank will take a strategic pause for a while.
Meanwhile, the USD to IDR price reacted to the strong Indonesian GDP data. According to the country’s statistics agency, the economy contracted by 0.92% in the first quarter as the growth slowed. This decline was better than the median estimate of -1.0%. On a YoY basis, the economy rose by 5.03%.
USD/IDR technical analysis
The Indonesian rupiah has been one of the top-performing currencies this year, having jumped by 7% from December. It recently moved below the important support level at 14,836, the lowest level on February 2. The pair’s sell-off is being supported by the 50-day exponential moving average. It has also moved below the 61.8% Fibonacci retracement level.
Therefore, the path of the least resistance for the Indonesian rupiah is higher, with the next level to watch being at 14,430, the 78.6% retracement point.
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