ASIA STOCKS: A Positive Day for Major Bourses

Core CPI inflation printed at the bottom of the Bank of Thailand’s 1-3% target band in April. It rose a stronger-than-expected 1.0% y/y from 0.9%. This measure is likely to be the focus with headline impacted by government subsidies as well as lower vegetable and global oil prices. It fell to -0.2% y/y from +0.8% y/y in March, weaker than expected. After cutting rates in both February and April, further monetary easing is likely this year. 

Thailand CPI y/y%

• The Bank of Thailand (BoT) is concerned about the impact of US trade policy on Thailand, especially if there isn’t a deal to reduce the proposed 36% tariff. Also, the stand-off between China and the US could put downward pressure on Thai inflation if China reduces prices to find other markets.
• The government expects inflation to stay negative in May. BoT expects headline inflation at 0.2% to 0.5% in 2025 and was revised down due to lower oil prices and government policy.
• Energy prices were down 6.7% y/y in April after -0.9% y/y as the state subsidised fuel and global oil prices fell sharply over the last few months with WTI almost 18% lower in April. Core inflation excludes private road transport and accommodation costs and so is not impacted by these factors.
• Food prices rose 1.6% y/y in April but down from 2.35% with eggs & vegetables declining over the year helped by increased supply. 

• RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing 
• RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 2: 1.1608 High Nov 9 2021
• RES 1: 1.1440/1573 High Apr 23 / 21 and the bull trigger  
• PRICE: 1.1324 @ 05:51 BST May 6
• SUP 1: 1.1269 20-day EMA and a key support
• SUP 2: 1.1144 High APr 3    
• SUP 3: 1.1047 50-day EMA and a pivot level     
• SUP 4: 1.0805 Low Apr 3  

Recent weakness in EURUSD appears corrective. The trend structure remains bullish - moving average studies are in a bull-mode position  signalling a dominant uptrend. The latest move down has also allowed an overbought condition to unwind. A resumption of gains would open 1.1608, the Nov 9 2021 high. Initial key support to watch is the 20-day EMA, at 1.1269. A break of this average would signal scope for a deeper pullback.

• RES 4: 133.90 1.236 proj of the Mar 25 - Apr 7- 9 price swing                 
• RES 3: 133.00 round number resistance      
• RES 2: 132.56 High Feb 28 and a key resistance
• RES 1: 132.03 High Apr 7 and the bull trigger                    
• PRICE: 130.83 @ 05:28 BST May 6
• SUP 1: 130.52/129.92 50-day EMA / Low Apr 11          
• SUP 2: 129.02 Low Apr 10            
• SUP 3: 128.60 Low Apr 9 and a key support   
• SUP 4: 128.47 Low Mar 28  

Bund futures continue to trade below their recent highs. Despite the latest move down, a bull cycle is in play and the sell-off between Apr 7 - 9 is considered corrective. Sights are on resistance at 132.03, the Apr 7 high and a bull trigger. Clearance of this level would confirm a resumption of the uptrend and open 132.56, the Feb 28 high. Firm support lies at 128.60, the Apr 9 low. A break of this level would alter the picture.