AUD/IDR Outlook:
The AUD/IDR is likely to increase as it trades above its recent average and is near recent highs. Strong employment data in Australia supports this upward movement.
Key drivers:
• Rate gap: The Reserve Bank of Australia's tighter monetary policy contrasts with the Bank of Indonesia's more cautious approach, benefiting the AUD.
• Risk/commodities: Rising global commodity prices, particularly for Australian exports, enhance demand for the AUD amid increased economic activity from China.
• Macro factor: Recent strong jobs figures in Australia bolster expectations for further interest rate hikes, providing additional support for the AUD.
Range:
The AUD/IDR is likely to test the higher extremes of its recent volatility range.
What could change it:
• Upside risk: A significant improvement in Australian manufacturing data could boost the AUD further.
• Downside risk: Increased political instability in Indonesia could lead to capital outflows and weaken the IDR, impacting the exchange rate.