U.S. CPI Steals Limelight After BoT's First Rate Hike In Over Three Years

Spot USD/THB re-opened lower, playing catch up with overnight reaction to below-forecast U.S. CPI data and resultant greenback sales. This brings USD/THB roughly to yesterday's starting levels. The pair last deals -0.240 at THB35.325.

• A retreat under Jun 29 low of THB34.960 would confirm that bearish momentum is building, with the 100-DMA providing the next layer of support at THB34.739. Bulls look for a rebound towards Jul 21 high of THB36.945.
• The Bank of Thailand raised the one-day bond repurchase rate by 25bp in its first hike since 2018. The decision was in line with our prediction and Bloomberg consensus forecast. It was taken in a 6-1 vote in favour, while the sole dissenter backed a 50bp rate rise. We will learn more details about the meeting after the publication of edited minutes on Aug 24.
• The MPC reiterated that "the extraordinarily accommodative monetary policy will become less needed" and therefore "the policy rate should be normalised (...) in a gradual and measured manner." The language of the statement confirmed that the focus is shifting to inflation management, with less concern about growth and financial stability.
• The House committee gave a nod to a revised FY2023 spending plan in which THB7.64bn has been cut and reallocated to support 10 different schemes, the Bangkok Post reported.
• The University of the Thai Chamber of Commerce will publish its consumer confidence data later today. Headline index gained for the first time in half a year in June but remains at very low levels.
• Elsewhere, PM Prayuth will chair a meeting of the new special committee to manage economic crisis.
• Worth noting that Thailand will observe a public holiday tomorrow and domestic financial markets will be closed.