THB: Baht Leads The Charge In Early 2023
USD/THB hit fresh lows close to 33.30 in early trade, but we are slightly higher now, back above 33.45. Current levels are still slightly firmer for the session, while the baht comfortably remains the best performer within EM Asia FX to date in 2023, up nearly 3.5%, with KRW the next best (+2.15%), slightly outperforming CNH.
- From the highs in late October around 38.50 in USD/THB, downside momentum in the pair in recent months has been very strong. The rolling 2-month rate of change in THB versus the USD, is beyond 11%, see the chart below.
- We have to go back to the late 1990s and post the Asia financial crisis to see a stronger rate of change over such a timeframe.
- The baht remains a favored play on the China re-opening theme, with the authorities yesterday walking back a requirement that arrivals need to show vaccine proof. The authorities expect 7-10million Chinese arrivals by air this year, although only modest arrivals are expected in Q1 (~300k). Thailand (along with China), is one of the few EM Asia economies where growth is forecast to be stronger in 2023 relative to 2022.
- How arrival trends unfold will likely be watched closely by the market, as will broader USD sentiment. BoT/domestic rhetoric around FX trends will also be monitored. Today the Shippers' council has stated the strong baht will hurt export growth.
- Whilst the baht recovery has been very strong, spot USD/THB levels are still comfortably above 2022 lows near 32.00, while the THB NEER is through 2022 highs, but remains close to 6% away from early 2020 levels.
- The 20-day EMA sits back at 34.45, while any moves back towards 34.00 may also draw selling interest.
Fig 1: Rolling 2-month THB/USD Spot Changes
Source: MNI - Market News/Bloomberg
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AUSSIE 10-YEAR TECHS: (Z2) Bullish Extension
- RES 3: 97.185 - High Apr 5
- RES 2: 97.040 - Aug 03
- RES 1: 96.760 - High Aug 16
- PRICE: 96.672 @ 14:43 GMT Dec 9
- SUP 1: 95.930/675 - Low Nov 8 / Low Oct 21
- SUP 2: 95.670 - Low Jun 17
- SUP 3: 95.590 - Low Dec 2013 and a key medium-term support
Aussie 10yr futures continue to climb. A key short-term resistance at 96.355, Oct 6 high, has been breached. This strengthens a short-term bullish position and the latest follow through reinforces this theme. Recent gains also highlight a positive price sequence of higher highs and higher lows, signalling scope for an extension. The 200-day EMA has been cleared, opening 96.760, Aug 16 high. Key support is 95.670, Jun 17 low (cont).
USDCAD TECHS: Bullish Above Trendline Resistance
- RES 4: 1.3855 High Oct 21 - Nov 16 bear leg
- RES 3: 1.3808 High Nov 3 and a key resistance
- RES 2: 1.3751 High Nov 4
- RES 1: 1.3700 High Dec 7
- PRICE: 1.3625 @ 16:19 GMT Dec 9
- SUP 1: 1.3515/3385 Former trendline resistance / Low Dec 5
- SUP 2: 1.3317/3226 Low Nov 24/25 / Low Nov 15 and bear trigger
- SUP 3: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
- SUP 4: 1.3139 Low Sep 14
USDCAD recouped a small part of the recent losses ahead of the Friday close, firming the view that the recent move lower appears corrective in nature. This keeps the bullish outlook intact for now. This week’s gains have resulted in a break of trendline resistance drawn from the Oct-13 high. The trendline intersects at 1.3515. Attention is on 1.3751 next, the Nov 4 high and 1.3808, the Nov 3 high. The latter is a key resistance and a break would strengthen bullish conditions.
AUDUSD TECHS: Approaching The Bull Trigger
- RES 4: 0.6976 2.00 proj of the Oct 13 - 27 - Nov 3 price swing
- RES 3: 0.6956 High Aug 30
- RES 2: 0.6909 76.4% retracement of the Aug 11 - Oct 13 downleg
- RES 1: 0.6851 High Dec 5 and the bull trigger
- PRICE: 0.6804 @ 16:18 GMT Dec 9
- SUP 1: 0.6669 Low Dec 7
- SUP 2: 0.6629/6585 50-day EMA / Low Nov 21
- SUP 3: 0.6387 Low Nov 10
- SUP 4: 0.6272 Low Nov 3 and a key support
The AUDUSD trend condition is bullish and the recent move lower appears to be a correction. Price remains above key support at 0.6629, the 50-day EMA. A clear break of this average would be seen as a bearish development and signal scope for a deeper retracement. 0.6851, the Dec 5 high is the bull trigger. A break would confirm a resumption of the uptrend and open 0.6909, a Fibonacci retracement.
