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THB: USD/THB Up Off Recent Lows, Fed Outcome Key Near Term Risk

THB
GlobalEM BulletBulletAPACEmerging Market NewsRegionThailand

USD/THB tracks near 33.30/35 in early Tuesday trade. We are around 0.20% weaker in baht terms so far today, after the pair ended Monday's session at 33.23. Carry over USD gains, particularly in terms of USD/JPY, post yesterday's onshore close, is likely weighing on THB at the margins so far today. 

  • Intra-session lows from Monday came in near 33.16, a break below this level is likely to see round figure support at 33.00 targeted. On the topside, the 20-day EMA is back near 34.00 based off Monday closing levels. Based off the RSI (14), we are close to oversold conditions, but haven't breached this threshold yet.
  • The pair remains closely aligned with US-TH 2yr yield differentials. This spread is back to +140bps, around 120bps off earlier 2024 highs. The actual Fed outcome and the outlook the Fed delivers will clearly dictate sentiment on such spreads as we progress through the second half of the week.
  • Locally, the data calendar is fairly empty, with customs trade figures due next week. Today, PM Paetongtarn Shinawatra will hold a cabinet meeting to approve the digital wallet scheme (which is smaller in scope compared to the previous PM's plan).
  • In the cross asset space, gold prices clearly remain supportive. Local equities are trying to break higher. Offshore investors have remained net buyers of local equities, although inflow momentum has slowed somewhat.
  • For USD/THB a hawkish Fed cut, i.e. which delivers firmer short term Tsy yields should ultimately draw selling interest in the pair, with the 20-day EMA likely to be seen as a key resistance point. 
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USD/THB tracks near 33.30/35 in early Tuesday trade. We are around 0.20% weaker in baht terms so far today, after the pair ended Monday's session at 33.23. Carry over USD gains, particularly in terms of USD/JPY, post yesterday's onshore close, is likely weighing on THB at the margins so far today. 

  • Intra-session lows from Monday came in near 33.16, a break below this level is likely to see round figure support at 33.00 targeted. On the topside, the 20-day EMA is back near 34.00 based off Monday closing levels. Based off the RSI (14), we are close to oversold conditions, but haven't breached this threshold yet.
  • The pair remains closely aligned with US-TH 2yr yield differentials. This spread is back to +140bps, around 120bps off earlier 2024 highs. The actual Fed outcome and the outlook the Fed delivers will clearly dictate sentiment on such spreads as we progress through the second half of the week.
  • Locally, the data calendar is fairly empty, with customs trade figures due next week. Today, PM Paetongtarn Shinawatra will hold a cabinet meeting to approve the digital wallet scheme (which is smaller in scope compared to the previous PM's plan).
  • In the cross asset space, gold prices clearly remain supportive. Local equities are trying to break higher. Offshore investors have remained net buyers of local equities, although inflow momentum has slowed somewhat.
  • For USD/THB a hawkish Fed cut, i.e. which delivers firmer short term Tsy yields should ultimately draw selling interest in the pair, with the 20-day EMA likely to be seen as a key resistance point.