USD/IDR surrenders 14,900 as Indonesian Retail Sales soar, US Inflation eyed

• USD/IDR has dropped below 14,900 after upbeat Indonesian Retail Sales data.
• Bank of Indonesia might reconsider its stable policy stance as Retail Sales have expanded by 0.6%.
• The downside bias for US Dollar has been strengthened after light inflation guidance from Fed policymakers.

The USD/IDR pair has slipped sharply below the crucial support of 14,900 in the Asian session. The asset has witnessed a steep fall amid the release of the bumper Indonesian Retail Sales data. The economic data has expanded by 0.6% against a contraction of 0.6% on an annual basis. Strong retail demand has bolstered inflation expectations, which could force the Bank of Indonesia (BI) to consider more rate hikes.

Meanwhile, S&P500 futures are struggling to find a decisive move as investors have sidelined ahead of the result season of the first quarter of CY2023, portraying a mixed market mood. Technology and banking stocks are expected to underperform amid higher interest rates and the recent banking crisis.

US Treasury Secretary Janet Yellen cited on Tuesday that the United States economy is critically strong as the banking sector is strong and resilient, inflationary pressures are softening consistently, and labor demand is rising. This conveys an anticipation of a decent performance from the S&P500 ahead.

The US Dollar Index (DXY) has slipped again to near day’s low at 102.04 and is expected to test the crucial support of 102.00. The downside bias for US Dollar has been strengthened after light inflation guidance from Federal Reserve (Fed) policymakers. Minneapolis Fed Bank President Neel Kashkari sees inflation at the middle 3% by end of this year, closer to 2% next year.

Demand for US government bonds has turned choppy as investors are looking to make informed positions after the release of the US inflation and Fed minutes. The 10-year US Treasury yields are hovering around 3.43%.