Written by Lukman Otunuga, Research Analyst at FXTM
The main event risk for the Rupiah on Wednesday will be Indonesia’s Loan growth states which should offer fresh insight into the changes in total loans and leases for the months of January.
An uptick in loan growth may indicate that the largest economy in Southeast Asia could accelerate at a faster pace in 2018. Indonesia’s Jakarta Composite Index could receive a welcome boost if loan growth prints above market expectations in January. Interestingly, Indonesia’s Rupiah weakened against the Dollar on Tuesday with the USDIDR trading towards 13655. There is a suspicion that the Rupiah’s weakness has little do with a change of sentiment towards the Indonesian economy but heightened expectations of higher US interest rates. Technical traders will continue to observe if the upside momentum can push the USDIDR towards 13680.
Sterling boosted by UK inflation data
Sterling received a boost on Tuesday after UK inflation for the month of January read at 3.0%, above the 2.9% market estimates. The UK inflation figures may reinforce speculation of higher UK interest rates, ultimately supporting the Pound.
From a technical standpoint, the GBPUSD remains under noticeable pressure on the daily charts. Bears managed to secure a weekly close below the 1.3850 level, and as such could pave a path to further downside. Previous support at 1.3850 may transform into a dynamic resistance that encourages a decline lower towards 1.3700. Alternatively, a daily close back above 1.3850 may invite an incline towards 1.4000.
Global stocks continue to rebound
Investors seem to have entered the new trading week with a renewed appetite for risk, as global stocks rebounded from their worst week in two years on Monday.
Most Asian shares closed higher on Tuesday following Wall Street’s solid rebound overnight. In Europe, equities are expected to open on a positive note, with the bullish domino effect potentially supporting Wall Street this afternoon. With global equity markets still highly sensitive to fears of rising inflationary pressures and higher interest rates, equity bears could still make an unwelcome appearance.
Commodity spotlight – Gold
Gold popped higher during Monday’s trading session with prices rising towards $1329, thanks to a softening US Dollar. While Dollar weakness could in the short term offer the yellow metal further support, gains are likely to be limited by rising expectations of higher US interest rates. Focusing purely on the technical picture, the yellow metal remains under pressure on the daily charts. A failure for prices to keep above the $1324.15 level could inspire a decline towards $1300. Alternatively, if bulls are able to hold their ground above $1324.15, prices could venture towards $1340.
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