Key Moments
- USD/IDR traded around 17,970 in Asian hours on Thursday, extending gains for a second straight session.
- Indonesia’s Retail Sales declined 3.7% YoY in April and fell 11.6% MoM, reversing March’s gains and signaling softer household demand.
- Stronger US inflation and heightened geopolitical risks reinforced expectations of a “higher-for-longer” Federal Reserve policy stance.
Rupiah Under Pressure as USD/IDR Extends Advance
USD/IDR continued to advance for a second consecutive session, trading near 17,970 during Thursday’s Asian session. The pair remained supported as the Indonesian Rupiah (IDR) weakened in the wake of disappointing domestic Retail Sales data.
Indonesian Retail Sales Post First Annual Decline Since April 2025
Indonesia’s consumer sector showed clear signs of strain in April. Retail Sales contracted 3.7% year-over-year, a sharp reversal from the 3.4% year-over-year expansion recorded in March and the first annual decline since April 2025. On a month-over-month basis, Retail Sales fell 11.6%, erasing March’s 10.3% increase and marking the steepest monthly drop since June 2022.
The abrupt setback underscores a notable softening in household spending, as higher non-subsidized fuel prices continue to erode consumer purchasing power.
Safe-Haven Demand Rises on Escalating Middle East Tensions
The US Dollar found additional support from heightened geopolitical risk, which boosted demand for safe-haven assets. In the Middle East, the Israel Defense Forces’ Home Front Command issued early civilian defense alerts after rocket launches from Lebanon targeted northern Israel. Tensions increased further when US Central Command confirmed that it had conducted airstrikes in Iran.
Political rhetoric also intensified. According to the report, US President Donald Trump warned of serious military repercussions if an interim peace accord is not reached, accusing Tehran of deliberately delaying talks – an allegation that Iranian officials strongly reject.
US Inflation Data Reinforces Higher-for-Longer Fed Outlook
The US Dollar (USD) also benefited from stronger-than-expected inflation dynamics that reinforced expectations of a prolonged period of elevated interest rates from the Federal Reserve. US inflation in May accelerated to its fastest pace in more than three years, driven largely by war-related increases in energy prices.
Headline Consumer Price Index (CPI) rose 4.2% year-over-year and 0.5% month-over-month, with both figures exactly matching market expectations. Core CPI, which excludes food and energy, increased 0.2% on a monthly basis and 2.9% year-over-year. Following the data release, market participants moved decisively to price out any remaining prospects of Fed rate cuts this year.
US Dollar Performance Against Major Currencies
Over the last 7 days, the US Dollar has strengthened against most major currencies, with the most pronounced gain versus the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | IDR | |
|---|---|---|---|---|---|---|---|---|
| USD | — | 0.42% | 0.25% | 0.29% | 0.29% | 1.73% | 1.39% | 0.00% |
| EUR | -0.42% | — | -0.17% | -0.17% | -0.15% | 1.31% | 0.68% | 0.00% |
| GBP | -0.25% | 0.17% | — | 0.02% | 0.04% | 1.51% | 0.85% | 0.00% |
| JPY | -0.29% | 0.17% | -0.02% | — | 0.02% | 1.48% | 0.80% | -0.96% |
| CAD | -0.29% | 0.15% | -0.04% | -0.02% | — | 1.42% | 0.77% | -1.28% |
| AUD | -1.73% | -1.31% | -1.51% | -1.48% | -1.42% | — | -0.65% | -2.50% |
| NZD | -1.39% | -0.68% | -0.85% | -0.80% | -0.77% | 0.65% | — | -1.04% |
| IDR | 0.00% | 0.00% | 0.00% | 0.96% | 1.28% | 2.50% | 1.04% | — |
The table reflects cross-currency percentage changes over the past week. The currency on the left acts as the base, and the one along the top serves as the quote. For instance, selecting the US Dollar from the left column and moving to the Japanese Yen column shows the percentage move in USD (base)/JPY (quote).
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