Bias: The outlook for AUD/IDR is bullish-to-range-bound, given that the current level is above the 90-day average and sits in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of Australia is considering potential interest rate hikes, while Bank Indonesia has just cut rates, creating a contrasting monetary landscape.
- Risk/commodities: Oil prices have remained stable recently, supporting the Australian dollar as a commodity currency, especially given its ties to resources like iron ore.
- China’s economic recovery is slow, dampening demand for Australian exports, which could weigh on the AUD's performance.
Range: The AUD/IDR is likely to drift within the recent range as external factors balance the bullish influences of rising rates against caution linked to Chinese demand.
What could change it:
- Upside risk: A stronger-than-expected rebound in Chinese economic activity could enhance demand for Australian exports and boost the AUD.
- Downside risk: Further unexpected rate cuts by Bank Indonesia could increase downward pressure on the IDR, impacting the AUD/IDR exchange rate negatively.