Baht A Strong Outperformer Today

THB is the standout in Asia FX so far today. The pair last tracked near session lows in the 34.25/30 region, gains of ~1% in the session to date. We were last at these levels back in mid-May. This is sub all key EMA levels. In the first half of May we reached the 33.55/60 region, which could be a downside target for baht bulls. Recent highs come in just above the 35.00 level, which would also put us back above key EMAs (100 day is the nearest at 34.66).

• Optimism that Thailand may be closer to forming a new government, with Pita prepared to step aside if he fails to win support again, is aiding sentiment (this would see Pheu Thai PM candidate stand, most likely Srettha). This backdrop may take some of the risk premium out of the baht outlook, indeed it was one of the factors Goldman's highlighted as underpinning a fresh long recommendation in the currency.
• USD/THB is now off by 4% from late June highs, compared with a -3% move down in the BBDXY over the same time period.
• Elsewhere, the Oil Fuel Fund Office will extend the retail diesel price subsidy at 32 baht per liter, until there is a new government is formed.