2024-03-20 01:40:16
The baht opened this morning at 36.09 baht per dollar, stable, unchanged from the previous day’s closing level. Keep an eye on the Fed match tonight.
Mr. Poon Panichphibun Capital Market Strategist Krungthai GLOBAL MARKETS Krungthai Bank revealed that the baht opened this morning at 36.09 baht per dollar, stable, unchanged from the previous day’s closing level.
Since the night before The baht fluctuates sideways (oscillating in the range of 36.04-36.10 baht per dollar) with some strengthening. This follows a fall in the dollar and a slight rebound in gold prices.
In addition, the depreciation broke through the important resistance zone of 36.00 baht per dollar. This has caused some market players, such as the exporter side, to gradually sell some dollars. or players who have a short THB position (looking at the baht depreciating) since the reversal from the zone of 35.30 baht per dollar. They may gradually sell to make a profit before knowing the results of the FOMC meeting, causing the depreciation of the baht to slow down.
However, the depreciation broke above the resistance zone. This will give the baht an opportunity to weaken and test the next resistance zone of 36.20 baht per dollar without difficulty.
for Trend of the baht value We evaluate that The weakening through the important resistance zone of 36.00 baht per dollar will open the way for the baht to easily fluctuate and weaken and test the next resistance zone of 36.20 baht per dollar.
If the baht actually breaks through the resistance zone, It will cause the baht to depreciate into the zone of 36.50 baht per dollar (technically, the picture is a depreciation through the Triple Tops).
This is a factor that will put pressure on the baht. Including every asset in the financial market is the results of the Fed’s FOMC meeting, especially the new Dot Plot issue.
We estimate that the new Dot Plot will remain unchanged from the original. which will still reflect that The Fed has the opportunity to cut rates three times this year and four times next year. Because of the overall picture of the US economy It has slowed down more. Especially in the areas of employment and household consumption. Although inflation may slow down somewhat
If the new Dot Plot does not change, we expect that market players may “Sell on Fact” by selling long USD or short UST positions to make a profit, causing the dollar and the US 10-year bond yield to shrink. a little and helps support both gold prices Including the baht to rebound somewhat.
Interestingly, the volatile Japanese yen depreciated much more than we estimated. It may turn around and strengthen. Especially if the 10-year US bond yield can actually shrink.
On the other hand, we admit that making changes to the Dot Plot is not difficult. Because it relies on only 2 Fed officials who see the Fed cutting interest rates 2 times or less in order to make the median of this year’s Dot Plot reflect that the Fed will cut interest rates less than 2 times, which if the new Dot Plot reflects that The Fed may actually cut interest rates less than 3 times.
We expect that the financial market will be more volatile following concerns regarding the Fed not being in a hurry to cut interest rates or the theme. “Higher for Longer” will come back to put pressure on the market This gives the dollar and the US 10-year bond yield a chance to rise somewhat, putting pressure on the baht to weaken past our assessed resistance level as well.
The dollar and US bond yields How much will it adjust? It will depend on the Fed’s forecast. How many times will the interest be reduced or will it not be reduced at all? (The dollar strengthened the most. and US bond yields adjusted to the highest in this case)
In this regard, one should keep an eye on the direction of fund flow from foreign investors. After recently, foreign investors returned to selling more Thai assets. Especially in the Thai bond section. Both short term and long term bonds This is another important factor that pressures the baht’s volatility to depreciate.
We would also like to emphasize that during this period, the volatility of the baht is higher than the historical average. (Looking at the weekly baht frame) clearly causing us to maintain the advice that Entrepreneurs should use a variety of hedging tools, such as Options, to increase efficiency in hedging once morest exchange rate risk.
And in addition to using the aforementioned tools Choosing to transact in local currency is another interesting way to manage exchange rate risk. Entrepreneurs should compare transaction costs and hedging plans before making every decision.
Looking at the baht today It is expected to be at the level of 36.00-36.15 baht/dollar before the market knows the results of the Fed’s FOMC meeting.
and assess the baht range at 35.85-36.35 baht/dollar during the period when the market gradually receives the results of the Fed’s FOMC meeting.
sideUS stock market
Still supported by the rise of AI-themed stocks, especially Nvidia +1.1%, which benefited from the launch of a powerful new AI chip at the event. “NVidia GTC 2024”
In addition, the continuous increase in crude oil prices during this period. It also helped support energy stocks to rise, such as Exxon Mobil +0.7%, resulting in the overall S&P500 index closing the market +0.56%.
shoreEuropean stock market
The STOXX600 index rebounded and rebounded +0.26%, supported by reports of the economic confidence index for Germany and the Eurozone (ZEW Economic Sentiment) that improved better than expected.
In addition, the European stock market also received support from the continued rise of energy stocks, such as Total Energies +2.7%, but the European stock market was under some pressure. From the decline of Healthcare stocks such as Novo Nordisk -1.9%
in the shoreBond Market
The US 10-year bond yield is still fluctuating near the level of 4.30%, with market players waiting to wait for the results of the Fed meeting to be known in the early morning of Thursday.
The factors that will affect the direction of the US 10-year bond yield are forecasts of economic trends and forecasts of the Fed’s new policy interest rate (Dot Plot). Market players are worried that the Fed’s new Dot Plot may indicate that The Fed will cut interest rates less than three times previously estimated.
We view that in such a case, if it happens, it may cause the US 10-year bond yield to become more volatile and have an opportunity to test the 4.50% zone in the short term.
But we maintain the same view that The rise of bond yields It will allow investors to gradually buy Buy on Dip US 10-year bonds from Risk-Reward which still has the interest of holding long-term bonds. In a period of falling interest rates
sidecurrency market
The dollar fell slightly. Following a slight contraction of the US 10-year bond yield.
Including risk exposure to the US stock market. That has caused some market players to choose to reduce their Long USD positions and take profits from such positions. Before learning regarding the Fed meeting As a result, the overall dollar index (DXY) continues to oscillate near the level of 103.9 points (oscillating within the range of 103.8-103.4 points).
In the sectiongold price
Although market players are still concerned regarding the Fed’s interest rate cuts, However, the timing of the dollar’s decline and the US 10-year bond yield are still enough to help the gold price (COMEX gold contract for delivery in April) to rebound near the zone of 2,160 dollars per ounce. However, market players still do not dare to go ahead and purchase additional gold. To wait to see the results of the Fed meeting
For today, interesting economic data reports will be in Europe. The players in the market will wait and see. February CPI Inflation Report and UK Producer Price Index PPI Report
This might affect the Bank of England’s (BOE) assessment of the monetary policy outlook. In addition, market players will be keeping an eye on the statements of European Central Bank (ECB) and Bank of England (BOE) officials.
As for the US side The main highlight will be the Fed’s FOMC meeting, which market players will gradually learn regarding in the early morning of Thursday around 1:00 a.m. Thailand time. We evaluate that The Fed may maintain the policy interest rate at 5.25%-5.50% as the market expects.
But the important point will be Economic forecasts and forecasts of new policy interest rates (Dot Plot) that may have a significant impact on the financial market. As a result, market players should be careful of fluctuations as the market gradually receives the results of the FOMC meeting.
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