Mr. Boon Panichphepon, Capital Markets Strategist, Krungthai GLOBAL MARKETS, Krung Thai BankThe inaugural baht value was revealed this morning (October 18, 2023) at 36.38 baht per dollar. “Slightly weaker. “Almost unchanged” from the previous day’s closing level of 36.37 baht per dollar. Look at the baht frame today and it is expected to be at 36.25-36.50 baht/dollar overnight. The baht is fluctuating sideways (fluctuating in the 36.28 range -36.47 baht per dollar) with its value declining after the rise in the value of the dollar. And the US 10-year bond yield after the US retail sales report. The result was much better than expected, but the decline in the value of the baht was limited. After the war between Israel and Hamas, which tends to Becoming more risky still supported the rise in gold prices, prompting some players to gradually sell gold to make some profits.This transaction flow helped slow the decline in the value of the baht during this period.
As for the direction of the baht value, we believe that the baht may continue to fluctuate sideways in a range that is not much different from the previous day. Amidst the state of war between Israel and Hamas, there is still a great deal of uncertainty. At the same time, the US 10-year bond yield rose sharply after the latest US economic data report came in better than expected, and today, Thai bond yields face the risk of rising. As a result, there may be additional selling pressure for Thai bonds from foreign investors. As for the stock side, the prevailing atmosphere in the financial market in general, which is still unwilling to take risks, may continue to put pressure on the Thai stock market during this period.
However, one should be careful of fluctuations during a market that is gradually receiving important economic data reports from China. If the Chinese economic data report comes out as expected or better than expected, which will reflect a better trend in China’s economic recovery, we believe that such a picture may help support the Chinese Yuan to gradually strengthen. It may help support the appreciation of Asian currencies to some extent. Especially the value of the baht recently, there have been some movements that are consistent with the Chinese Yuan (last correlation around +50%). On the other hand, if Chinese economic data reports are disappointing, this may put pressure on both the Chinese Yuan and Asian currencies, Initially we estimate that the baht resistance area remains in the range of 36.60 baht per dollar. Meanwhile, the first support area remains at around 36.00 baht per dollar. Until new factors emerge, come and change the perspective of market players.
The US stock market movement was volatile, and in general, the S&P500 index closed the market at -0.01%, with some gains after reports of the operating results of listed companies such as Bank of America, which were better than expected. However, market participants still do not dare to Go ahead and make a decision. Risk.more After the war, there is still uncertainty due to reports of explosions in hospitals in the Gaza Strip. In addition, the financial market atmosphere is also under pressure from the US government’s announcement of plans to suspend chip exports to China, as well as concerns about this trend. The Fed may keep interest rates at high levels for an extended period. From the latest report retail sales expanded much better than expected.
As for the European stock market, the Stoxx600 index fell by -0.10%, affected by the rise in long-term European bond yields. According to the 10-year US bond yield from the US economic data report. The result was better than expected. Meanwhile, performance reports of European listed companies were not so bright. As a result, market players still do not dare to go ahead and take risks.
On the bond market side, opinions from market players who remain concerned about the Fed’s tendency to keep interest rates at a high level for an extended period (higher for longer) after the recent better-than-expected US economic data report supported the 10-year bond. . The return. The US could gradually rise to the 4.84% level. However, even though long-term US bond yields are volatile, we still recommend buying the dip when bond yields rise because the risk and reward of holding long-term bonds in a high yield period are worthwhile and attractive.
In terms of the currency market, the dollar continues to fluctuate sideways, as the dollar index (DXY) is still fluctuating near the level of 106.2 points (range 106-106.6 points), with signs of appreciation appearing on the dollar. According to the US economic data report, this was better than expected, but some market players gradually sold some dollars to make a profit. As a result, the dollar cannot continue to rise clearly. In terms of gold price, although the price of gold (COMEX gold contract for delivery in December) will face pressure from the increase in the US 10-year bond yield, uncertainty about the war situation may intensify. Still helping support gold prices could stabilize near $1,937 an ounce. Which must be closely monitored whether the price of gold will be able to continue rising through the resistance area of $1,940 per ounce or not, because the rise through the aforementioned area will reflect that gold prices have begun an upward trend again.
Today, one of the most important events that market players will be waiting to follow closely is the important economic data report from China. (It was gradually acknowledged during 9:00 AM Thailand time) by several analysts who assessed that the Chinese economy may expand in the third quarter by about +4.5% year-on-year, slowing from the previous quarter. But it expanded +1.0% on a quarterly basis, reflecting the gradual recovery of the Chinese economy supported by domestic consumption. After gradually issuing economic stimulus measures, this will be in line with the important economic data report for September. Retail sales may grow by +4.9% on an annual basis, while industrial production may grow by +4.3% on an annual basis, and investment in fixed assets may grow by +5.2% on an annual basis only, due to pressure since the beginning of the year by the sector. Real estate is still not recovering well
On the European side, the market will be watching the UK CPI inflation data report in September. As inflation continues to slow (particularly core CPI inflation) it may allow the Bank of England (BOE) to continue maintaining interest rates at 5.25%.
In addition, market players will continue to monitor the war situation between Israel and Hamas. Will the war intensify or expand to include the entire Middle East?