Rupiah strengthened due to rising risk appetite and US dollar depreciation

7 August 2018, 06:05
Candra Sugiarto
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Indonesia's currency (IDR) has the potential to continue to strengthen in the short term if the dollar weakens. Even so, because trade tension is still weighing on sentiment and the dollar is supported by expectations of a rate hike, the appreciation of the Rupiah may be limited.

Technical traders will continue to observe how   USD / IDR   reacts below 14500. A sustained decline below this level could trigger further declines towards 14400.
  • Global sentiment improved as the US-EU agreed to cut tariffs
Market sentiment was greatly improved after US President Donald Trump agreed with the European Union to avoid a transatlantic trade war. The United States and Europe reached an agreement to move together towards "free tariffs, barriers and subsidies for non-automotive industrial goods" to stop increasing trade tensions, with investors gladly accepting the outcome of the meeting, as seen from global stocks that are rising due to risk sentiment This positive news can strengthen the stock market in the short term, but sustained trade tension between the US and China can be an obstacle to rising momentum now.
  • Dollar bulls paused
The dollar slipped to a two-week low against a basket of major currencies after the US and European Union agreed on measures to reduce trade tensions. This decline was coupled with disappointing US new home sales data, which became a reason for sellers to attack. There is a suspicion that the dollar depreciation was caused by profit taking ahead of the highly anticipated Friday's US GDP report. Although the dollar may weaken in the short term, market speculation about a US interest rate hike this year may limit the decline. From a technical aspect, the Dollar Index has the potential to touch 94.00 in the short term.
  • Commodity Spotlight - WTI Crude Oil
Oil prices rose on Thursday morning after the EIA reported a significant drop in US crude inventories. The weakening dollar also supported price increases in the range of $ 69.30 at the time this report was written. From a technical aspect only, WTI crude oil can go back up to $ 70.00 if the bulls manage to conquer $ 69.60.
  • Commodity Highlights - Gold
Gold is trying to stabilize this week amid the US Dollar depreciation. Even so, this precious metal remains bearish on the daily chart and can weaken again if the dollar stabilizes. Although global trade tensions can make the market look safe and increase interest in safe haven instruments such as gold, the increase will be limited by expectations of US interest rate increases
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