8 Sentiments to Determine JCI and Rupiah This Week: OPEC+, The Fed - China
A number of important economic data points will determine the direction of global and domestic financial markets this week. From the United States, investors will await service sector indicators and the minutes of the Federal Reserve meeting. Domestically, attention is focused on foreign exchange reserves, consumer confidence, and Bank Indonesia’s retail sales survey. Consumer confidence data and retail sales surveys are crucial for measuring the strength and resilience of Indonesian consumers heading into mid-2026.
OPEC+ has again agreed to raise its oil production target by 188,000 barrels per day (bpd) starting in August. The decision, announced on Sunday, adds to global supply amid weakening oil prices and the recovery of exports through the Strait of Hormuz. This increase follows similar quota additions in June and July. Cumulatively, the seven core OPEC+ members have raised production targets by nearly 800,000 bpd since April. However, actual output has not fully increased due to the US-Israel-Iran war disrupting tanker traffic in the Strait of Hormuz. OPEC+ production reportedly fell to 33.13 million bpd in May from 42.77 million bpd in February, before beginning to recover in June. Meanwhile, oil prices have returned to around US$72 per barrel, far below the peak of over US$120 per barrel. The price decline was triggered by falling Chinese oil imports, increased supply from non-Middle Eastern producers, and the release of global strategic petroleum reserves. OPEC+ also faces new challenges after the United Arab Emirates left the alliance and Iraq pushed for a larger production quota. According to Reuters calculations, the seven core members still have around 379,000 bpd of production cuts that have not yet been returned to the market. If production is raised again at the next meeting on 2 August, the production cuts agreed in 2023 are expected to be fully unwound.
The week opens with the release of the US ISM Services PMI for June on Monday evening Indonesia time. The consensus forecast expects the index to edge down slightly to 54.2 from 54.5 in May. Although a slight decline is projected, this level still reflects expansion in the services sector. The market will use this to gauge whether the US economy remains solid while also monitoring persistent price pressures for clues on the direction of the Federal Reserve’s interest rate policy.
Bank Indonesia will release its foreign exchange reserves data for June on Tuesday. The reserve position previously fell to US$144.9 billion due to government external debt payments and intervention to stabilise the rupiah. Despite this, the level is still considered very safe as it is sufficient to finance 5.6 months of imports. The market will be watching to see if reserves have increased again amid ongoing pressure on the rupiah.
On Wednesday, Bank Indonesia will announce the Consumer Confidence Index for June. The index previously stood at 120.9 in May, still in the optimistic zone although it had weakened slightly. This data is an important indicator for measuring the resilience of household consumption, the main engine of Indonesia’s economic growth. Although still above the 100 level indicating consumer optimism, the decline