AUD/IDR Outlook: Likely to increase as the rate is above its recent average and nearing recent highs, supported by strong economic data from Australia.
Key drivers:
• Rate gap: The Reserve Bank of Australia's focus on potential interest rate hikes contrasts with Bank Indonesia's recent rate cut, making the AUD more attractive.
• Risk/commodities: Strong metals prices and the resilient Australian economy bolster the AUD despite geopolitical challenges, while the IDR struggles amid weaker domestic conditions.
• One macro factor: Australia's impressive employment figures, with the unemployment rate dropping significantly, enhance expectations for continued AUD strength.
Range: The AUD/IDR is expected to test higher levels while remaining volatile within the recent range.
What could change it:
• Upside risk: A surprise announcement from the RBA regarding more aggressive rate hikes could boost the AUD further.
• Downside risk: A deterioration in global trade conditions or increased unrest in Indonesia may exert downward pressure on the IDR, affecting its exchange rate.