Despite expectations for the Fed, tonight's U.S. ADP Employment Change data failed to provide support for the strengthening dollar. What is the reason?
The market shrugged off ADP Employment Change growth of 807K in December. That was still happened although the figure was higher than the expectations of 375k.
According to Nela Rihardson as an ADP's Chief Economist, the rise in the United States private sector growth is due to the fading adverse effects of the Delta variant. There has been no significant effect of the Omicron.
The amounts of people infected by Omicron are increasing day by day. However, the good news is that this variant is less infectious than the others.
Elsewhere, Rupiah is Slipped Down
Welcoming the beginning of 2022, the Rupiah has not managed to show a strengthening versus the US Dollar. That can be seen from the foreign exchange data lately.
Even in the first two trading days of the year, the currency was faithfully stuck in the red zone. When the news was written on Wednesday (05/January), The USD/IDR traded in the range of 14361.5.
It means that Rupiah was trengthening by 0.39% so far. According to some experts, one of the main causes of the Rupiah sinking quite deeply is the sharp rise in the US bond yields.
That situation supports the strengthening of the Dollar Index. The move is a sign that market participants are starting to anticipate the America’s rate hike this year.
The Raising Rates from the Fed can Affect the Position
A Market observer, Ariston Tjendra, said that the Rupiah still has the potential to continue the weakening of its current position. It can be seen from the several conditions.
The exchange rate of that currency still has the potential to weaken against the US dollar today. It is because the market still anticipates a rise in the America's central bank's benchmark interest rate in 2022.
Ariston said that the Fed's rate hike plan is most likely to occur in June 2022. However, the development of high inflation in the U.S. led many market participants to Many things.
One of them is that the Fed would start raising interest rates in March 2022. If that was done, the currencies position can be affected.
Market Still Wary of Omicron
In addition to the increase in U.S. bond yields, the Rupiah is also still not completely separated from the threat of the Omicron variant that has now entered the country.
From within the country, the market is also still wary of the development of COVID-19 cases. That is especially the Omicron variant that has begun to increase.
Currently, the Omicron's case in Indonesia continues to grow. Ministry of Health spokeswoman Dr. Siti Nadia Tarmizi said that the total number of Omicron cases was 254.
Of these cases, 239 came from the international travelers (imported cases). For local transmission, there were 15 cases so far in the country.
Meanwhile, the Gold’s Price Increases
Gold prices rose in the trading session wednesday night due to the weakening of the US dollar and an increase in Omicron cases in a number of countries.
The Spot of gold rose by 0.1 percent to $1817.10 an ounce, in line with gold futures on New York's Comex, which rose 0.2 percent to $1818.50. The following XAU/USD chart also shows a 0.55% rise to $1824.09.
However, in the long run, an ActivTrades analyst Ricardo Evangelista warned that the gold prices are still threatened by the bullish US dollar. It is especially when the Fed is increasingly aggressive in tightening monetary policy.
The factor that offers a turning point in gold's strengthening is the strengthening of USD. that is also because of the likelihood that the currency will get stronger due to the Fed's tight monetary policy.
