USD/THB Hovers Just Above 10-Month Lows, BoT Poised To Leave Rates Unchanged

Spot USD/THB trades +6 pips at THB30.22 ahead of today's BoT meeting, hovering just above its 10-month low printed on Monday. A recovery of Nov 12 high of THB30.36 would allow bulls to take aim at Nov 9 high & 38.2% retracement of the Oct 26 - Nov 16 sell-off at THB30.59. Conversely, losses past Nov 16 low of THB30.14 would confirm that the downtrend is intact, opening the round figure/Dec 30, 2019 low of THB30.00/29.97.

• The Bank of Thailand's MPC holds its first meeting chaired by the new Governor Sethaput Suthiwart-Narueput. There is a virtual consensus that the MPC will leave the main policy rate unchanged at 0.50%. With interest rates already at low levels compared to regional peers, the BoT's monetary ammunition is somewhat depleted and policymakers have been calling for increased fiscal spending.
• Meanwhile, the government has been urging the central bank to stem currency appreciation. A week ago, FinMin Arkhom Termpittayapaisith told reporters that the BoT is "taking care" of the exchange rate. On Monday, the FinMin added that he will discuss the matter with the BoT, as measures are needed to limit THB strength. Separately, Dep PM Supattanapong noted that the BoT is closely monitoring the baht and its current strength may be short-lived.
• On a different front, Thailand continues to grapple with ongoing social unrest. Pro-democracy protesters clashed with the police and royalists yesterday, as lawmakers debated constitutional amendments. Protests are set to resume today.