USD/THB Lower As Softer US Yields Help Offset Domestic Headwinds

USD/THB has fallen a little over 0.60% in the first part of Thursday trade. We were last near 36.46, slightly up from session lows near 36.42. This puts us back sub the 50-day EMA (around 36.51). Yesterday's moves above the 20-day (36.64) couldn't be sustained. The 100-day EMA is back near 36.23.

• Concerns around BoT independence, amid reports the government will look to exert more influence over the central bank weighed on baht yesterday.
• Such concerns may keep offshore investors somewhat on the sidelines. Equity outflows are negative month to date (-$65mn) and while bond inflations have been positive they are generally lagging other parts of the region.
• Still, broader USD/US yield trends will also be a key near term driver for USD/THB. US-TH 2yr government bond yields sit back at +237bps, lows in the spread back to early March this year.
• This has helped offset some headwinds outlined above, with US data momentum generally surprising on the downside in recent weeks.
• Locally, we have May CPI print tomorrow. Headline y/y is expected to rise to 1.2% y/y from 0.19%, but core is expected to be steady near 0.4% y/y. This comes ahead of next week's BoT decision.