AUD/IDR Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia's focus on potential interest rate hikes, driven by rising inflation, contrasts with Bank Indonesia's interventions to stabilize the rupiah.
• Risk/commodities: Recent drops in commodity prices, especially in precious metals, have pressured the Australian dollar, which is sensitive to commodity market fluctuations.
• One macro factor: The weakening of China’s factory activity could hinder demand for Australian exports, further impacting the AUD.
Range: Movement is likely to test the recent extremes given the volatility, but ultimately may hold close to current levels.
What could change it:
• Upside risk: An unexpected strong recovery in commodity prices could boost the AUD significantly.
• Downside risk: Any additional weakening in China's economy may further pressure the AUD, dragging it lower against the IDR.
