Q3 GDP tops forecasts, lifting Indonesian Rupiah

• 5.47% year-on-year GDP growth in Indonesia for Q3 2026 exceeded the market forecast of 5.2%.
• The Greenback faces heavy selling pressure following a US Democratic election sweep and a decline in oil prices.
• 82% odds of a Fed rate hike, alongside strong US ADP employment figures, helped limit broader US dollar losses.

USD/IDR trades near 18,110 in Thursday’s Asian session. The pair remains under pressure for a second consecutive day, while the Indonesian Rupiah (IDR) retains its gains against the US Dollar (USD) after the publication of    third-quarter Gross Domestic Product (GDP) figures.

At 5.47% year-on-year, Indonesia’s GDP growth in the third quarter of 2026 exceeded the 5.2% market forecast. The acceleration marked a strong recovery from Q2’s three-quarter low of 5.29%. Quarter-on-quarter growth reached 1.59%, comfortably above the 1.3% consensus estimate despite slowing sharply from the previous quarter’s 3.73% surge.

A weaker Greenback following the Democratic sweep in the US midterm elections weighed on USD/IDR. Investors grew more concerned about political gridlock in Washington after Democrats secured control of both houses of Congress. Oil prices also fell sharply on expectations of a swift resolution to the Middle East conflict, adding to pressure on the US dollar.

Resilient US economic releases may nevertheless underpin the US dollar (USD), having strengthened expectations of additional monetary tightening by the Federal Reserve. According to ADP, private-sector employment increased by 86,000 in October, exceeding the 69,000 forecast despite a small downward revision to September’s figures. The ISM Services PMI, at 54.5, fell slightly short of expectations but continued to indicate steady service-sector expansion.

Nearly an 82% probability of a December Fed rate hike is now priced into the CME FedWatch Tool, reflecting financial markets’ strong tilt towards tighter US monetary policy. For further direction, investors are focusing on forthcoming US labour releases: Thursday’s weekly initial jobless claims and Friday’s nonfarm payrolls report.

USD weakness: relief rally as Dollar moves towards centre of its smile

Rather than signalling the onset of a more disorderly move, the latest G10 Dollar weakness is best viewed as “something of a ‘relief rally’”, according to Scotiabank analysts. In their assessment, the price moves represent “a shift in the USD toward the middle of its ‘smile’, in which relative growth and interest rate differentials narrow as the US/USD drift from the edge linked to exceptionalism – with the other edge of the smile tied to sentiment-driven risk aversion.”