Baht Underperforms As China's Commitment To Zero-COVID Bodes Ill For Tourism

Overnight demand for the U.S. dollar has generated a tailwind for spot USD/THB early doors. The rate has now unwound its losses posted on Tuesday in reaction to the news re: China loosening border controls. It last changes hands +0.120 at THB35.320.

• Note that Chinese President Xi yesterday lauded his flagship dynamic Zero-COVID strategy as most "economic and effective" for China and vowed to stay the course. His hard-line stance bodes ill for the recovery of Thailand's tourism industry, China being the largest pre-pandemic contributor of foreign visitors.
• From a technical perspective, topside focus falls on THB35.573, which limited gains on Jun 24. A breach of that cyclical high would confirm the strength of underlying uptrend, shifting focus to Jan 9, 2017 high of THB35.799. Bears need a drop under Jun 16 low of THB34.830 before taking aim at the 50-DMA at THB34.558.
• The World Bank kept its +2.9% Y/Y forecast for Thai 2022 GDP growth unchanged from the April projection but warned against the country's exposure to elevated oil prices and supply chain disruptions. The World Bank will hold a webinar on its Thailand Economic Monitor later today.
• Thailand's manufacturing production unexpectedly shrank in May. The -2.11% Y/Y print not only missed the median estimate (+1.55%) but was also accompanied by a downward revision to the previous reading. Only one of the 10 economists surveyed by Bloomberg expected contraction.
• BoP data are set to steal the limelight today. Consensus forecast for BoP current account balance is -$3.0bn in a Bloomberg survey. We are also awaiting the release of customs trade data in the coming days.