Krung Thai Bank, Krungthai GLOBAL MARKETS, Money Market Strategist Mr. Boon Panishpibun said the baht opened at 36.01 baht to the dollar this morning. “Valued” from the previous day's close of 36.11 baht per dollar.
Albeit in an appreciative direction overall since last night. However, there was significant volatility in the movement. (Fluctuating in the range of 36.00-36.19 baht per dollar) with rapid depreciation. This comes with a rise in US 10-year bond yields from better-than-expected US retail sales reports, following the dollar's appreciation. As a result, market players initially reduced expectations of the central bank's tendency to cut interest rates 3 times this year, however, the dollar did not strengthen for a long time and began to face gains. According to exposure to risk (risk-on) of the US stock market. This was supported by better-than-expected US economic data reports and bright operating results from most listed companies. Market players believe that there is a 63% chance of a 3-time rate cut this year, which supports the price of gold (XAUUSD) due to a decline in the dollar and US 10-year bond yields. It continued to rise to the zone of 2,460-2,470 dollars per ounce. This gave market players an opportunity to gradually sell gold to make a profit, and the flow of such transactions contributed to the baht continuing to strengthen, testing the important support zone at 36.00 baht per dollar.
The situation in the US stock market is still risk-on, supported by US retail sales reports. The latest has come out better than expected. This somewhat eased worries about an economic slowdown, while it was supported by better-than-expected earnings reports from listed companies such as the US stock market BofA +5.4%, supporting the overall S&P500 index to close the market up +0.64%, despite tech stocks. Adults will face some sales pressure to make a profit.
On the European stock market side, the STOXX600 index continued to decline -0.28% as concerns about the earnings outlook continued to weigh on brand name product stocks. Also, a decline in crude oil prices on concerns about the Chinese economic outlook and TotalEnergies -1.6% put pressure on mining stocks. 2.3%
The latest U.S. retail sales report on the bond market came in better than expected. Support for US 10-year bond yields in the 4.20% zone, but market players' views that still estimate the Fed is likely to cut interest rates about 3 times this year (63% chance from the latest CME FedWatch tool), pressures US 10-year bond yields to return to the 4.17% zone. has given From the movements in the US 10-year bond yield over this period before the market agreed to the retail report, we estimate that the US 10-year bond yield could turn more sideways, with a critical support zone at 4.15%, which we see. The market can wait and see the outcome of the Fed meeting. Including important US economic data reports. This will move the US 10-year bond yield more clearly ahead of a clear correction to long-term bond holdings at the end of the month – beginning of next month.
On the currency market side, the dollar is volatile. According to the US Retail Sales Report, this trend is quickly and strongly appreciated. It came in better than expected but the US stock market's risk exposure and market players' views that still expect the central bank to cut interest rates three times this year continue to put pressure on the weakening dollar. As a result, the overall dollar index (DXY) is still trading at 104.3 points (swinging in a range of 104.2-104.5 points) based on gold prices. A depreciation of the dollar and a decline in US 10-year bond yields supported gold prices. (COMEX gold contract for delivery in August) may continue to rise to the zone of $2,470-2,480 per ounce. As a result, market players gradually sell gold and make additional profit. This flow of gold trading transactions also contributed to the baht's value last night.
Today, market players await to assess the Bank of England's (BOE) outlook for monetary policy with the June CPI inflation and PPI inflation reports.
On the Asian side, market players estimate that the Indonesian central bank (BI) may maintain its policy rate at 6.25% as Indonesia's inflation rate approaches BI's target.
On the US side, market players are waiting to assess the Fed's outlook for monetary policy. Summarizes economic conditions through reports of Fed officials and various Fed branches (Fed Beige Book).
And in addition to the above factors the earnings reports of the listed companies will also be of interest to the market players.
Regarding Baht's trend, we agree that Baht's continuous appreciation has tested the support zone at 36.00 Baht per dollar. While last night came out better than expected due to a better-than-expected U.S. retail sales report, however, moves in the dollar, U.S. 10-year bond yields and gold prices last night lead us to believe the Fed will cut interest rates three times this year as market players continue to expect (CME FedWatch tool should be more than 60% chance), the dollar and US 10-year bond yields may not be able to improve much until the market stops believing in this view, the pot was able to strengthen and test the important support zone, and the appreciation will continue to be limited. Until the market becomes aware of additional new factors, we estimate that the next support level for the baht may be in the zone of 35.85 baht per dollar. If the baht strengthens to 36 baht per dollar zone and exits. Clearly during the day, we think Pat might face some pressure. From transactions to buy commodities such as crude oil, including transactions to buy the Japanese yen (JPYTHB), the yen again weakened somewhat against the baht to sell additional Thai assets. Until the Thai capital market restores investor confidence. You will have to wait until the operational results of most of the listed companies are clearer than expected.
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 35.85-36.15 baht/dollar.
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