• Q3 2026 Indonesian GDP grew 5.47% year-over-year, beating market forecasts of 5.2%.
• A US Democratic election sweep and falling oil prices put heavy downward pressure on the Greenback.
• Strong US ADP job data and 82% Fed rate hike odds helped cap broader US dollar losses.

USD/IDR remains subdued for the second successive day, trading around 18,110 during Asian hours Thursday. The Indonesian Rupiah (IDR) holds gains against the US Dollar (USD) following the release of    Gross Domestic Product (GDP) data for the third quarter.

Indonesia’s economic growth accelerated in the third quarter of 2026, with GDP expanding 5.47% year-over-year. This beat market expectations of 5.2% and marked a strong rebound from the three-quarter low of 5.29% recorded in Q2. On a quarterly basis, the economy grew 1.59%. Although this represents a sharp deceleration from the 3.73% surge in the previous quarter, it still comfortably surpassed the consensus estimate of 1.3%.

The USD/IDR pair experienced downward pressure as the Greenback weakened following a Democratic sweep in the US midterm elections. With Democrats taking control of both houses of Congress, investor concerns over political gridlock in Washington grew. Further weighing on the US dollar was a sharp drop in oil prices, driven by market expectations of a swift resolution to the Middle East conflict.

However, the US dollar (USD) may find underlying support from resilient domestic economic data, which reinforced expectations of further monetary tightening by the Federal Reserve. US private-sector employment added 86,000 jobs in October according to the ADP report, beating the forecast of 69,000 despite a minor downward revision to September’s figures. Additionally, the ISM Services PMI registered at 54.5, slightly below expectations but still signaling steady expansion in the service sector.

Looking ahead, financial markets are heavily leaning toward tighter US monetary policy, with the CME FedWatch Tool pricing in nearly an 82% probability of a Fed rate hike in December. Market participants are now turning their attention to upcoming US labor data, including Thursday’s weekly initial jobless claims and Friday’s nonfarm payrolls report, for further direction.

Dollar slide seen as relief rally as USD shifts toward middle of its smile

Analysts at Scotiabank suggest that the latest bout of G10 Dollar weakness is best understood as “something of a ‘relief rally’” rather than the start of a more disorderly move. They argue that the price action reflects “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.”