US Economic Data Disappointing, Rupiah Exchange Rate Potentially Continues Stronger

INDUSTRY.co.id - Jakarta - The rupiah strengthened early in the Asian trading session on Monday (31/07/2017). That's thanks to the depreciation experienced by the United States dollar (US) post-release of disappointing US economic data on Friday (28/07/2017) last week thus disclosed Putu Agus Pransuamitra, money market analyst PT Monex Investindo.

According to US economic data, Uncle Sam's economic growth in the second quarter of this year grew 2.6% compared with the first quarter of 1.4%.

"However, the price index of GDP (Gross Domestic Product), which is the benchmark of inflation rate in the US, shows a decline to 1% in the second quarter of 2017 compared to 1.9% in the first quarter of 2017," Putu said in Jakarta on Wednesday (31 / 07/2017).

In addition, Putu said, the increase in labor costs also showed a decrease to 0.5% in the second quarter of 2017 compared to 0.8% in the first quarter of 2017.

Putu said the GDP price index data and labor cost data damped market participants' estimates that the Federal Reserve as the US central bank would raise interest rates more aggressively. The reason is, the low inflation rate in the US is still a major factor for Federal Reserve officials, including Janet Yellen as the central bank's governor, in taking policy interest rate hikes there.

Therefore, FedWatch owned by CME Group estimates the market still sees the possibility of US interest rate hike in December is still below 50%. Meanwhile, the rupiah exchange rate in Asian markets still has the potential to continue strengthening in the rest of the trading today with the target at 13,315. (Abraham Sihombing)