Krungthai reveals the value of the baht opened this morning at 37.06 baht per dollar. “Weakened slightly”

Mr. Poon Panitchpibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank, revealed that the baht opened this morning at 37.06 baht per dollar. “Weakened slightly” from the previous day’s closing level of 37.03 baht per dollar.

Since the night before The value of the baht fluctuates sideways (oscillating in the range of 36.97-37.11 baht per dollar), with high fluctuations as the market gradually receives reports of important US economic data, including the economic growth rate in the first quarter of this year. and the number of people applying for unemployment benefits (Jobless Claims), with the US economy expanding by +1.6% from the previous quarter. compared yearly Less than the market expected (However, most of the pressure factors come from Inventory changes and Net Exports). At the same time, the Personal Consumption Expenditures (PCE) price index in the first quarter of this year It soared to 3.4%, much higher than expected. This makes market players even more worried about US inflation. It may slow down even more slowly. As a result, the Fed may have to use strict monetary policy for a longer time. Recently, market players have estimated that The Fed has only a 35% chance of cutting interest rates twice this year, which has helped the US 10-year bond yield rise past 4.70%, while the dollar has strengthened somewhat. Putting pressure on the baht’s volatility to depreciate, but the depreciation of the baht has slowed down somewhat. following the rebound of the gold price That is driven by the demand for safe assets. From the risk-taking situation of the US stock market

All the big tech stocks in the US stock market Still facing selling pressure such as Meta -11%, Microsoft -2.5% amid concerns about the outlook for Fed interest rates (for Meta, additional pressure from lower-than-expected sales forecasts), resulting in the Nasdaq tech stock index falling -0.64%, while the S&P500 index closed the market -0.46%.

On the European stock market side, the STOXX600 index continued to decline -0.64%, pressured by the selling pressure of tech stocks and growth style stocks such as SAP -3.1%, LVMH -2.8%. In addition, the earnings reports of many companies issued Came worse than expected There is additional pressure on European stock markets, such as Adyen -18%, Nestle -2.0%.

On the bond market side, the US 10-year bond yield rose past the level of 4.70% after market players were concerned about the Fed interest rate trend. From the PCE Index (and Core PCE) report in the first quarter GDP report of this year. which came out higher than expected, reflects that the inflation rate of the United States It may slow down more slowly than expected and risks causing the Fed to tighten monetary policy longer. This picture is consistent with our view that the US 10-year bond yield risks testing the 4.70% zone if market players are more concerned about the Fed interest rate trend. And today, the US 10-year bond yield still has There is an opportunity to continue to improve as well. If the PCE inflation report (especially Core PCE) in March comes out higher than expected, however, we probably view the US 10-year bond as being interesting at every moment of the increase. (Emphasis on the strategy of gradually Buy on Dip) with a more worthwhile Risk-Reward.

On the currency market side The dollar fluctuated sideways with some strengthening. This follows an increase in the US 10-year bond yield, which was driven by concerns about the Fed interest rate outlook. However, some market players are gradually selling to make a profit from Long USD positions (watching the dollar strengthen), causing the dollar to turn around and shrink. And overall, the Dollar Index (DXY) still oscillates in the zone of 105.6 points (oscillating in the range of 105.5-106.0 points) in terms of gold prices. The pace of the upward movement of both the dollar and the US 10-year bond yield has pressured the price of gold (COMEX gold contract for delivery in June) to fall below the zone of 2,330 dollars per ounce. Before the price of gold rebounded to the zone of 2,350 dollars per ounce. According to the risk-taking situation of the US and European stock markets, the aforementioned rebound in gold prices has caused some market players to gradually sell gold to make some profit. This caused the price of gold to shrink slightly and swing around the zone of 2,340 dollars per ounce. The flow of gold profit-making transactions also helps to slow down the depreciation of the baht.

For today, the important highlights will be US PCE inflation report for March (Reported during 7:30 p.m. Thailand time) which if it came out higher than expected It will make market players more worried about the Fed interest rate trend. As a result, the dollar and the US 10-year bond yield may not easily continue to rise.

In addition, another important highlight that should be closely watched is the results of the Bank of Japan (BOJ) meeting. The results of the meeting will be known around 10:00 a.m. Thailand time. And there will be a statement to the media by the BOJ Governor at 1:30 p.m. In this BOJ meeting, we expect that the BOJ may maintain the policy interest rate as before. But we must keep an eye on the BOJ’s adjustments to the government bond purchasing plan, which may signal readiness to use more stringent monetary policy. You also need to keep an eye on the BOJ’s new economic forecast that will help reflect future monetary policy trends, for example if the BOJ adjusts its inflation forecast higher. It may reflect that the BOJ has the opportunity to gradually increase interest rates and, more importantly, must be wary of the Japanese government’s intervention in the value of the Japanese yen. After the yen weakened past the 155 yen per dollar zone. The Japanese authorities may use the timing during the BOJ meeting to intervene, or they may wait while the market is aware of the US PCE inflation report as well.

And on the Thai side, market players will wait and follow. Report on Thai exports and imports in March. It is expected that exports will continue to expand.

For the trend of the baht value We evaluate that The baht tends to be highly volatile during the period when the market gradually receives the results of the BOJ meeting and when the market gradually receives the US PCE inflation report. One must be wary of intervention in the value of the yen by the Japanese authorities. Historically, we have found that such interventions often lead to The Japanese yen strengthened sharply in the short term, around +3% at least. If this happens, it may cause the dollar to weaken somewhat. And it will not be difficult for the baht to strengthen and break out of the 37 baht per dollar zone. However, we probably think that factors pressuring the baht to weaken still remain. As a result, the baht may still be stuck in the support zone of 36.80 baht per dollar (the next support level is 36.60 baht per dollar). And if there is no intervention and the BOJ has not signaled readiness to use additional strict monetary policy, we expect that the baht The Japanese yen is at risk of further depreciating fluctuations. Supporting the dollar to strengthen If the dollar receives additional support From the PCE inflation report that may come out higher than expected. It will put the baht at risk of weakening and test the zone of 37.15-37.25 baht per dollar as well. And if the baht weakens past that zone, the level of 37.50 baht per dollar. It will be the next resistance level.

However, we must keep an eye on the fund flow of foreign investors. whether it will gradually purchase additional Thai assets or not Because if foreign investors continue to gradually purchase Thai assets It may help slow down the depreciation of the baht to some extent. In addition, some market players may wait to gradually sell dollars. Or take profit from short THB positions during the said resistance zone as well.

We view that the baht is still highly volatile. Amid the changes in factors affecting the direction of the baht’s value. As a result, market players should use a variety of strategies to close risks. Either using tools like Options or local currency. This will increase efficiency in closing exchange rate risk.

Looking at the baht today It is expected to be at the level of 36.80-37.25 baht/dollar.