In the near term, people are looking at the ECB and a rate hike in March. That is supporting the euro.
Over the medium term, it's still looking positive for Indonesia and the currency. They're going to be cautious not to scare off investors.
These latest comments are quite worrying, as it's the first indication that the central bank is thinking about cutting the rate. The suggestion that we're going to get lower rates is likely to lead to a weaker currency.
There's ongoing speculation over a possible end to quantitative easing...today's data has added more fuel to the fire. But the timing is still very uncertain.
The Europeans are concerned that should China allow more appreciation in the yuan that we could see an acceleration of dollar weakness, and that could spill over into major markets, and we could see European currencies strengthening.
