Investors expect the market to have bottomed out, as the USD’s safe-haven demand eases. The USD DXY index, which had jumped to its highest level of 108.5 last week, fell to 106.4 yesterday. Investors returned to risk assets, especially technology stocks, making the Nasdaq consistently traded in the green zone, closing up 1.6%. Wall Street’s appreciation occurred in the midst of a cooling US property market. Data shows US Existing Home Sales in June fell 5.4% MoM to as much as 5.12 million units, or sales on a downward trend since January 2022, as June 30-year Mortgage Rates came to nearly 6%, compared to 3.3% at the start of the year. Mortgage Rates soared as FFR increased by 150 Bps during 2022. Investors are also anticipating the impact of the Strong Dollar on 3Q22 Earning Results.

BI Behind the Curve. The potential for BI to maintain the BI 7DRRR at 3.50%, and allow the Rupiah to be relatively stable at the level of IDR15,000/USD, will put BI behind the curve, amid the potential for an increase in FFR of 75 bps – 100 bps next week. The underlying assumption of this projection is that Indonesia’s core inflation remains low at 2.63% YoY, below the median value of BI’s 2%-4% annual target. Thus, the issue of inflation in the near future has not become a concern for market participants. Unlike the case with the US, which recorded headline inflation of up to 9.1% YoY. Another opinion states that a 25 bps increase in BI 7DRRR is needed to reduce the potential for higher inflation in 3Q22. The wait-and-see attitude of investors ahead of the results of the BI RDG has pushed NHKSI Research project that the JCI will move downward in the range of 6,700-6,900.

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