The USD/IDR is displaying back and forth moves in a narrow range of 14,570-14,581.00 in the Asian session despite poor Retail Sales. The Indonesian Retail Sales have tumbled sharply to 9.3% against the expectations of 11.5% and the prior print of 12.9%. Lower-than-expected Retail Sales will continue to batter the Indonesian Rupiah going forward against the greenback.
Earlier, the pair witnessed a firmer run-up from a low of 14,494.40 to an intraday high of 14,583.45 on upbeat US inflation. The US Consumer Price Index (CPI) landed at 8.3% in comparison with the forecasts of 8.1%. A higher-than-expected inflation figure has bolstered the odds of a 75 basis point (bps) interest rate hike by the Federal Reserve (Fed). No wonder the Fed could step up its borrowing rates by a bumper rate hike to tame the galloping inflation.
Although the street has a 75 bps rate hike figure on their list, St. Louis Fed President holds the view that 50bps hikes at coming meetings are "a good benchmark for now". Adding to that, one single report of inflation is insufficient to be considered in a broader context but inflation will persist longer.
Going forward, the focus of the market participants will be on the US Producer Price Index (PPI) numbers. The US PPI is likely to land at 10.7% against the prior print of 11.2% on yearly basis. While the US PPI excluding food and energy is seen at 8.9% vs. 9.2%.
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