AUD/IDR Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average, though lacking clear drivers for a significant increase.
Key drivers:
• Rate gap: The Reserve Bank of Australia's potential interest rate hikes may keep the AUD strong compared to Bank Indonesia's recent rate cut aimed at boosting growth.
• Risk/commodities: Rising oil prices could benefit the AUD by increasing demand for Australian exports, although current volatility in commodities limits upward momentum.
• One macro factor: Australia's upcoming inflation data could reinforce RBA's rate hike expectations, supporting the AUD, but remains tightly linked to uncertainties in global market conditions.
Range: The AUD/IDR is likely to hold within its recent 3-month range, fluctuating but not testing the extremes significantly.
What could change it:
• Upside risk: A surprising increase in Australian inflation could lead to stronger bets on interest rate hikes.
• Downside risk: A further deterioration in China’s economic recovery could hurt demand for Australian exports, negatively impacting the AUD.