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Rabu, 13 November 2013

Morning Dew - November 14th 2013

CA Improved
  • Stocks widely retreated on Wednesday as the market responded to Tuesday’s move by BI. Finance and property stocks remain vulnerable domestically as these two sectors are considered as rate-sensitive.
  • Current account deficit has narrowed in the 3Q13 to $8.4b or 3.8% from GDP compared to prior quarter’s deficit of $9.9b or 4.4% of GDP. According to BI, stronger decline in imports of non-oil and gas outpaced the decline in exports of non-oil and gas, thereby improving the balance between the two. Reduced deficits in both services and income accounts also helped. Current transfers account ended in surplus in 3Q13, better than the reading during the June quarter.
  • BI added that the 4Q13 may see this improvement to continue along with the improving global economic and financial conditions.
Eyes on Yellen
  • Dow’s decline halted as the market continues to move back and forth over the Fed’s own tapering timing. No key data tends to put the market rudderless for some time.
  • Yellen’s testimony on Thursday will attract some attention. Yellen is nominated to replace Ben Bernanke at the Federal Reserve early next year. Her policy is similar to Bernanke and her appointment at the Fed will be seen market friendly, especially in the US.

Technically Speaking...
  • JCI crashed through key support at 4,313/14, triggering a bearish zigzag structure which aims at at 4,313 first, which was reached immediately on Wednesday. Next aim is 4,133 as the equivalent wave target, followed by 3,837 as 1.68x Fibo projection target. Curiously enough, the latter was the this year’s low set in August. The smaller zigzag structure aims at 4,286 which was also reached today as JCI set an intraday low at 4,284.03, opening a way to the next one at 4,157.
  • Prior supports at 4,313/14 and 4,403 have now turned as resistance.
  • Both RSI and Stochastics are hovering around oversold area, while the MACD continued to decline, suggesting the index risks more downside.

Day Ahead

BI rate shocker was a game changer as it underlines its priority on current account deficit reduction and helping the ailing rupiah. As 3Q13 CA showed improvement and the central bank forecast continued improvement in 4Q13, the determinant of another rate hike will be the rupiah. The question is, will improving CA help stabilize rupiah?


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