China MLF Rate down 10Bps, Wall Street expects US economy will reach soft landing. PBOC unexpectedly cut 1Y Medium-Term Lending Facility (MLF) Rate Aug. from 2.85% to 2.75%. Zero Covid policy caused China’s 2Q22 GDP to contract -2.60% QoQ (Vs. 1Q22 expansion +1.40% QoQ). China’s Dovish attitude raises optimism that the Fed can achieve a soft landing for the US economy. In this week’s FOMC Meeting Minutes, investors are waiting for some clues as to whether the Fed will raise the FFR by 50Bps or 75Bps at the FOMC Meeting in September. Soft Landing optimism and lower FFR gains propelled Nasdaq to lead Wall Street’s gains, which closed 0.6% higher.
The decline of Trade Balance surplus and the depreciation of Rupiah pushed the JCI out of the psychological level of 7,100. NHKSI Research sees the relatively stagnant export volume, amid the normalization of prices for Indonesia’s main export commodities such as CPO and Nickel, means investors need to pay close attention to the Trade Balance in the future. At the beginning of the week, the JCI fell 36 points to 7,093, as Rupiah depreciated by 0.5% to IDR14,743/USD. This pressure has made NHKSI Research projects that JCI will move Bearish or alert to break support at 7,080. Meanwhile, the range of JCI movement is projected in the range of Support: 7,080 / 7,020 / 7,000 / 6,930 and Resistance: 7,130 / 7,175-7,181.
Download full report HERE.