Mr. Boon Panichphepon, Capital Markets Strategist, Krungthai GLOBAL MARKETS, Krung Thai BankThe baht opened this morning (October 17, 2023) at 36.29 baht per dollar. “Slightly weaker. “Almost unchanged” from the previous day’s closing level of 36.28 baht per dollar. Look at the baht frame today and it is expected to be at 36.20-36.40 baht/dollar in the lead-up to the release of the US retail sales report. And assess the range Baht at 36.10-36.50 baht per dollar during the market Gradually receiving US retail sales report overnight The baht is moving sideways (oscillating in a range of 36.23-36.31 baht per dollar) with a period of decline in value after gold buying pressure in some downturns At the same time, the depreciation of the baht was limited. After the dollar gradually weakened, the war situation between Israel and Hamas, which still has a high degree of uncertainty, may still be a factor pressing the depreciation of the baht. If the situation becomes more serious It is rising, causing crude oil prices to rise above $100 per barrel.
As for the direction of the baht value, we believe that the baht may continue to fluctuate sideways because market players may be waiting to monitor the developments in the war between Israel and Hamas. At the same time, if market players start to move gradually embrace more risks. If operating results for US-listed companies are reported better than expected, the dollar may weaken somewhat. (If the risk of war does not increase), which will be a supportive factor in strengthening the baht.
However, foreign investor fund flows remain volatile. We have yet to see a return to buying Thai assets. “Continuously” for foreign investors This will clearly result in the baht being unable to return to consolidation.
In this regard, we believe that we should be careful of fluctuations during the market’s gradual acceptance of the US retail sales report at around 7:30 PM local time in Thailand. So will US retail sales continue to slow as expected or will they come out worse than expected? It may make market players see that the Fed probably won’t be able to implement higher monetary policy for much longer according to the latest Dot Plot. We may see some weakness in the dollar. The US 10-year bond yield will shrink, which will help slow down the baht’s depreciation or strengthen the baht’s value to some extent.
On the other hand, if retail sales are higher than expected, this may cause market players to worry that the Fed may continue to raise interest rates or the Fed will not be in a hurry to cut interest rates and may cut interest rates only according to For the latest Dot Plot, which is the image above. It will support the dollar to recover and strengthen. Combined with the increase in the US 10-year bond yield, it will not be difficult and will put pressure on the baht to have a chance to decline. We estimate that the resistance zone for the baht may be around 36.60 baht per dollar. While the first support area will be around 36.00 baht per dollar.
On the bond market side is the gradual return of risk exposure among US financial market players. This supported the 10-year US bond yield to gradually rise to the 4.70% level again, in line with our view that longer-term bond yields are expected to remain at risk of further volatility. Until market players are certain, the Fed may not be able to pursue higher monetary policy for much longer (which may need to look at US economic data reports). (which have clearly slowed or worsened) We still recommend buying the dip when bond yields rise because the risk reward of holding long-term bonds during rising yields is worthwhile and interesting.
On the currency market side, although the risk of war still exists, market players are not very concerned about the recent war situation. At the same time, market players gradually began to return to risk-taking during the earnings season, which prompted market players to reduce their dollar holdings to some extent. Pressure on the dollar to decline slightly. The dollar index (DXY) fell to 106.2 points (range 106.1 – 106.5 points) in terms of gold prices. Despite the weakness of the dollar, the increase in the US 10-year bond yield put pressure on gold prices. (COMEX gold contract for December delivery) is still fluctuating near the $1,930 level per ounce. (associated with the resistance zone $1,935-1,940 per ounce) However, if the gold price can rise above the resistance zone again, we expect market players to gradually come in and sell for profit. This transaction flow could help support the baht’s appreciation.
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