2023-10-19 01:41:00
Mr. Poon Panichphibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank Revealing the value of the baht opening this morning (Oct. 19) at 36.38 baht per dollar. Weakened from the previous day’s closing level of 36.29 baht per dollar. and look at the baht framework today It is expected to be at the level of 36.25-36.55 baht/dollar. During the previous night, the baht fluctuated in a gradually depreciating manner. (Oscillating in the range of 36.23-36.41 baht per dollar) with a weakening trend following the risk-taking situation of the financial market from the Israeli-Hamas war situation that is still hot. This encourages the dollar to gradually strengthen following demand for safe assets, while at the same time, concerns about the effects of war Including the overall picture of the US economy. That still looks good This makes market players worried about the tendency for the Fed’s policy interest rates to remain high for a long time (Higher for Longer). As a result, the US 10-year bond yield rose to 4.90% again. However, the depreciation of the currency The baht was slowed down by the flow of gold trading transactions. After the price of gold continued to rise due to the risk of war.
As for the trend of the baht value, we think the baht may face additional depreciation pressure. Amidst the risk-taking situation of the financial market From the Israeli-Hamas war situation that tends to intensify and escalate Such concerns have caused the dollar to return to strengthening somewhat. However, the baht may receive some support from the flow of gold trading transactions. After the price of gold rose in line with the risk of war, foreign investor fund flows that are still highly volatile may be another factor that puts pressure on the baht to fluctuate and depreciate. If foreign investors continue to sell Thai assets, we estimate that The selling pressure of Thai assets from foreign investors may not be very intense. This is because the SET index has dropped to a level where valuation is not expensive and is an important support zone technically. As for the Thai bond yield, it may not continue to rise much. (It is expected that market players are waiting for clarity on Digital Wallet measures)
However, one should be careful of the volatility during the period when the market gradually receives the statement from the Fed Chairman. This is because market players are starting to give their weight to the Fed to continue raising interest rates at the December meeting. or more meetings early next year and sees that the Fed may reduce interest rates by only -50bps next year, if the statement of the Fed Chairman This causes market players’ views on the Fed interest rate trend to change. It may have quite an impact on the financial market.
The S&P500 Index dropped by more than -1.34% amid pressure factors including 1) the Israeli-Hamas war situation that is likely to intensify and escalate, 2) concern over the earnings outlook of chip manufacturing companies such as Nvidia after the official United States has announced plans to suspend chip exports to China; and 3) concerns about the Fed’s tendency to maintain its policy interest rate at a high level for a long time. From reports of US economic data that is still bright and the effects of the war that may cause oil prices to increase. affecting the trend of slowing down inflation
On the bond market side US economic data report The latest still comes out bright. Including the trend of crude oil prices continuing to increase. If the war situation escalates until it may affect the inflation trend This has caused market players to remain concerned about the Fed’s tendency to maintain the policy interest rate at a high level for a long time. Although the atmosphere in the financial market is clearly in a risk-off state, the US 10-year bond yield can gradually rise to the level of 4.90%. The volatility of the US long-term bond yield During this time, it was not different from what we expected. which we maintain the same advice that Investors can gradually buy on dips when bond yields are rising because the risk-reward of holding long-term bonds during high yields is worthwhile and interesting.
On the currency market side The dollar turned higher against major currencies. The dollar index (DXY) has risen to near the level of 106.5 points (range 106.1-106.7 points) with the dollar appreciating in line with the views of market players who are still concerned about the possibility of the Fed maintaining interest rates. high level for a long time and the need to hold the dollar as a safe-haven asset during wartime market concerns. In terms of the price of gold Although both the dollar and the US 10-year bond yield have been able to rise, the gold price (COMEX gold contract for delivery in December) is still supported by the demand to hold gold as a safe asset during the market. Worried about war as well Causing the price of gold to gradually increase to near the level of 1,960 dollars per ounce. This increase in the price of gold has encouraged market players to gradually sell gold to make some profit. And such transaction flows help to slow down the depreciation of the baht.
For today, market players will wait to follow the US labor market data report, such as the number of people applying for unemployment benefits (Jobless Claims), in order to evaluate the outlook for the Fed’s monetary policy. In addition, important highlights that market players will wait to follow: Closer are the statements from Fed officials. Especially Fed Chairman Jerome Powell (during 11:00 p.m. local time) after the latest US economic overview. It has not slowed down much. At the same time, the war factor may affect the inflation trend. Makes market players want to keep an eye on What will the Fed Chairman’s stance be on the Fed’s monetary policy outlook?
In addition, market players will continue to monitor the situation of the Israeli-Hamas war. Will it intensify or will the war expand to affect the entire Middle East region?
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