Employment and manufacturing data are solid, leaving more room for FFR gains. US weekly Initial Jobless Claims Aug. fell 5,000 to 232,000, in the week ending on Aug. 27, much lower than the consensus of 248,000. Solid employment data supported US manufacturing to grow steadily. ISM Manufacturing Aug. recorded at 52.8 (Surv. 51.9; Jul. 52.8). As there is a large chance for aggressive FFR hike in September, Nasdaq fell 0.3%. However, it also pushed DXY to reach a new record high of 109.7 points, along with a potential +75Bps September FFR increase, making USD a safe haven instrument. Meanwhile, Dow Jones and S&P 500 managed to close up 0.5% and 0.3% respectively.
Investors are observing the normalization of Statutory Reserves. Positive domestic economic data, with manufacturing expanding and inflation kept under 5%, made the JCI move back closer to 7,200. Data shows S&P Global Indonesia PMI Mfg Aug. expands to level 51.7 (Jul. 51.3); and CPI Headline Aug. recorded deflation on a monthly basis at -0.2% (Jul. +0.6%); annual inflation was maintained +4.69% (Jul. 4.94%). JCI finally closed down 25 points to 7,153. In addition to BI which has raised BI 7DRRR +25Bps, the normalization of the rupiah statutory reserve requirement to 9% as of September, has the opportunity to make deposit rates increase gradually, in line with rising inflation expectations. The increase in CoF has forced banks to adjust loan interest rates in order to maintain NIM. NHKSI Research projects that JCI will move sideways / consolidating in the range of Support: 7.135 / 7.080-7.070 / 7.050 / 7.015-7.000 and Resistance: 7,200-7,230.
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