USD/THB Close To 36.00, BoT May Recalibrate Policy Settings If Growth Weakens

USD/THB sits just off session highs, the pair last at 35.93, a little over 0.30% weaker in baht terms for the session. Earlier highs were at 35.96, which was fresh highs back to mid Nov last year. A break above 36.00 could see 36.15 targeted, highs from mid Nov last year. Earlier Nov highs rested around 36.33. The 20-day EMA is trending higher and sits back at 35.52.

• Baht is the weakest performer in EM Asia FX over the past week, down nearly 2% (MYR is the next worst of close to 1.3%). Weaker yen levels will be another THB headwind, as correlations remain positive.
• Continued fall out from the dovish BoT hold on Wednesday has also been a theme in recent sessions. 2yr Thailand government bonds yield are down around 7bps so far this week. US-TH 2yr government bond yield spreads are back to early Dec levels (last around +225bps).
• Comments from Assistant BoT Governor Pit have crossed from a BBG interview. He reiterated that the policy stance is neutral, but with most growth risks to the downside. If growth weakens they may recalibrate the policy bias. Note Q4 GDP is due out on Feb 19.
• Looking ahead to next week, the data calendar just has weekly FX reserves data later today, while next week we get Jan consumer confidence.
• Elsewhere, Focus is likely to rest on the digital wallet stimulus scheme, plus any other short term fiscal initiatives.