Reserves Up Slightly
JCI made another attempt to storm through the all-time record high at 5,251 but the rise stalled once more at 5,224, just below Thursday’s peak of 5,232. Lack of catalysts have led to price consolidation recently.
On the domestic side, the cabinet formation is seen as the most important events as it will reflect the president-elect Jokowi’s commitment to avoid power sharing among his supporting parties.
Bank Indonesia said that the forex reserves inched higher in August 2014 to US$111.2 billion, compared to US$110.5 billion in July. Strong oil and gas export income were behind the rise. The reserves can cover 6.5 months of imports or 6.3 months of imports and servicing government debt repayment. International standard for reserves adequacy is at 3 months of imports.
US stocks are climbing to record highs recently, and in addition to less robust NFP data, the market already bet that the Fed may raise rates later than initially expected.
USDIDR slipped to 11,770 on Friday compared to Thursday’s 11,760.
US Data
US Nonfarm payrolls only added 142k jobs in August, well below the consensus of 230k and lower than the July’s addition of 212k jobs. The unemployment rate for the same period however, ticked down to 6.1% from 6.2%, in line with the consensus.
Elsewhere in Europe, Eurozone GDP was stagnant in the 2Q14 compared to the 1Q14, while it grew 0.7% against 2Q13. The preliminary estimate supported the case of ECB’s rate cut on Thursday.
Technically Speaking...
JCI’s advance stalled at 5,224, just below the recent high at 5,232 as well as the index’s all-time record high at 5,251. The rise has negated the recent bearish engulfing pattern on the daily chart, but more commitment is needed if JCI is to break free from the record high.
As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support.
MACD has edged closer to positive area on Friday whilst RSI has fluctuated just below the 70% mark. Volume was lower on Friday, suggesting that the setback could be shallow and temporary.
Week Ahead
Next week, key data releases will include China trade balance and money supply data as well as inflation data; UK trade balance; US jobless claims, retail sales and University of Michigan sentiment. Weak payrolls may spark speculation that the Fed will raise rate not as fast as recently expected. With JCI still close to the record high, more attempts are expected in the coming week.
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