DOLLAR-THB : Thailand's trade balance bounced back...>

DOLLAR-THB : Thailand's trade balance bounced back in March according to the

Ministry of Commerce, returning to the black thanks to a new high in exports,

even as import growth rose at a faster pace.

- The recovery in the trade surplus is likely to prove temporary. The high

degree of energy intensity of the Thai manufacturing sector will mean that

rising oil price cause import costs to rise over the coming months.

- USDTHB has broken short-term resistance at 31.30, and currently sits at 31.43,

having broken cleanly above its 50DMA. The next significant level of resistance

comes in at 32.50. With pressure mounting on regional FX, we would not be

surprised to see the dollar surge against the baht over the coming weeks,

particularly as the BOT remains committed to keeping interest rates at

multi-year lows.

- The 2-year yield differential between the U.S. and Thailand is now almost a

full percentage point, the highest spread in over a decade and increasingly

bearish for the THB.