USD/IDR extends its losses for the second consecutive day, trading around 17,860 during Asian hours on Wednesday. The pair depreciates as the Indonesian Rupiah (IDR) gains strength, driven by improving market sentiment following stronger economic activity in China, Indonesia’s top trading partner.
Official data from China’s National Bureau of Statistics (NBS) showed the Manufacturing PMI creeping back into expansion territory at 50.1, matching market forecasts and recovering from August’s 49.8 reading. Meanwhile, the NBS Non-Manufacturing PMI saw a notable boost, rising from 49.0 in August to 50.2, comfortably beating the market expectation of 49.3.
Private sector data further highlighted China’s economic momentum across broader sectors. China’s RatingDog Manufacturing PMI climbed to 52.1 in September, outperforming both the previous reading of 51.5 and the 51.6 consensus estimate. Additionally, the Services PMI edged up to 51.6, topping both the prior month’s 51.4 and the expected 51.1, signalling steady overall improvement.
Investor confidence in the Rupiah received an extra boost from domestic policy assurance. Indonesia’s Finance Minister Suahasil Nazara reassured lawmakers that the state budget was designed with prudence and credibility to effectively buffer the national economy against persistent global uncertainty.
However, the downside of the USD/IDR pair could be restrained as the US Dollar (USD) gains support from firming market expectations for additional Federal Reserve (Fed) interest rate hikes.
CME FedWatch Tool data indicates that traders are currently pricing in nearly a 68% probability of a rate hike in October and a 95% likelihood of a 25-basis-point increase in December. Market focus now shifts to Friday’s upcoming US Nonfarm Payrolls report, with economists anticipating an addition of 90,000 jobs in September and the Unemployment Rate holding steady at 4.1%.
US funding markets stay calm despite heavier bill supply
BNY Markets’ John Velis highlights that US funding conditions have remained orderly even as Treasury bill supply has increased. He notes that “funding markets have been mostly calm since the Fed commenced reserve management purchases (RMPs), even though late summer bill issuance ramped up significantly and the last two monthly periods actually featured no new RMPs.” This underscores the resilience of money markets despite the combination of heavier T‑bill issuance and a temporary pause in fresh RMPs.