The US stock market remains under pressure as retail and banking stocks decline. But AI/semiconductors like AI/Semiconductors, a rebound in big tech stocks, particularly theme shares Nvidia +6.8% , helped the U.S. stock market a bit, with the Nasdaq tech stock index +1.36% rebounding higher, but the S&P500 index +0.39% closing the market down.
On the European stock market side, the STOXX600 index reversed and fell -0.23%, pressured by selling pressure in airline stocks. This follows a -9.4% decline in Airbus shares, with European equities still holding some support. Novo Nordisk shares rose +4% after popular weight loss drug Wegovy received approval in China.
As for the bond market, the US 10-year bond yield continues to fluctuate sideways around 4.25%, although some Fed officials such as Michael Bowman reiterate their stance that they are in no rush to cut interest rates. As long as we are confident in the inflation trend and are willing to support interest rate hikes If inflation slows or accelerates more than expected, market players see it as the Fed may cut interest rates about 2 times this year, leading us to think that US 10-year bond yields may fluctuate within a range. . Until the market recognizes additional new factors, bond yields can easily be more volatile. Especially if the US economic data report, inflation was higher than expected, any increase in US 10-year bond yields will be an opportunity to buy attractive long-term bonds. Because the outlook for Fed interest rates going forward is only “stable” or “low.”
On the currency market side the dollar gradually strengthened. Following the depreciation of all major currencies, in particular, the Japanese yen (JPY) continued to fall, returning to close to the 160 yen level to the dollar, while the euro (EUR) also weakened somewhat. Following a contraction in European stock markets, the dollar was limited. After reporting the US economic data came out mixed. In addition, the US stock market started to return more open to risk-taking and as a result, the overall dollar index (DXY) based on the price of gold rose to 105.7 points (oscillating between 105.4-105.7 points). The pace of the dollar's appreciation and risk to the US stock market have kept gold prices (COMEX gold contract for August delivery) down. Return to the support zone around $2,330 per ounce. Consequently, some market players may wait for such an opportunity to gradually buy gold. This exchange flow and the volatility of the baht caused some depreciation last night.
Today, market players await reports on US oil stock balances to follow. To estimate the energy requirement during this period. This may affect the direction of crude oil prices in the short term, and in addition, the flow of oil-related transactions may have some impact on the Baht. (Fluctuation of oil purchase transaction flow puts pressure on depreciation)
And, market players are waiting to follow suit. Reports from European Central Bank (ECB) officials help assess the ECB's monetary policy outlook, with market players expecting the ECB to cut interest rates two more times this year.
We estimate that the trend of Baht value has some chance of Baht fluctuation and depreciation. After the dollar strengthens again, the baht's depreciation may be limited to the resistance zone of 36.85 baht per dollar. (The next resistance level is 37 baht per dollar). including the flow of foreign investors' funds into the Thai capital market. This could be another factor weakening the baht, especially if the price of gold (XAUUSD) continues to decline towards the key support zone of $2,300 per ounce as selling pressure on Thai assets from foreign investors begins to ease somewhat. Thailand's stock market is starting to show signs of recovery. Meanwhile, there is not much pressure on the bond market. As long as US 10-year bond yields continue to move sideways and Thai political factors are yet to come to put additional pressure on financial markets.
Even if we estimate that the baht may not be highly volatile and depreciating. But constant praise is rare. Until the market recognized additional factors, we saw a boom in month-end transactions buying dollars and other foreign currencies. From the importer side this leaves the baht unable to strengthen the support zone of 36.50-36.60 baht per dollar yet.
We maintain the same view that the bot still moves accordingly and is prone to volatility. As a result of changes in factors affecting the direction of the bond, such as market players' views on the Fed interest rate trend, market players must use different strategies to hedge risks. Using instruments such as options or local currency. This will increase efficiency in hedging exchange rate risk.
Looking at the baht today, it is expected to be around 36.65-36.85 baht/dollar.
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