THB: HSBC On Recent THB Outperformance
The global bank weighs in on recent THB outperformance and THB prospects amid US-Thailand trade discussions.
HSBC: "The THB stands out as the outperformer among Asian currencies week-to-date.
As discussed in a recent note, much of the THB outperformance versus Asian peers can be explained by strong gold prices, despite a relatively lacklustre fundamental picture – since 3Q24, every 1% rise in gold prices has led to around 0.25% of THB outperformance with a 65% correlation. The THB’s correlation and sensitivity to gold prices is consistent when observed at an intraday frequency. The common USD denominator does not play a major role and this phenomenon is rather THB-idiosyncratic.
What could have strengthened the relationship even further recently was the fact that exchange rates were confirmed as a key discussion topic in trade talks between the US and some Asian economies. Market participants may speculate a similar dynamic regarding the ongoing trade negotiations between the US and Thailand, given the latter runs a relatively large current account surplus versus the former and has previously been put on the US Treasury’s currency manipulation monitoring list. While we think the BoT may be inclined to trim THB overvaluation facing weak economic fundamentals and lingering tariff risks (the Bank bought USD5.6bn in April based on our estimation), the ongoing trade negotiations may complicate things.
Fundamentally, THB overvaluation has been a long-term issue, partly driven by the incomplete recycling of its current account surplus. This is particularly evident between 2015 and 2019 when Thailand ran a persistent basic balance surplus. This issue may be returning amid some recovery in Thailand’s current account and heightened uncertainty in global financial markets."
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SCHATZ TECHS: (M5) Approaching The Bull Trigger
- RES 4: 107.812 0.618 proj of the Mar 6 - Apr 7 - 9 price swing
- RES 3: 107.800 Round number resistance
- RES 2: 107.775 High Apr 7 and the bull trigger
- RES 1: 107.700 Intraday high
- PRICE: 107.670 @ 06:24 BST Apr 22
- SUP 1: 107.370 Low Apr 17
- SUP 2: 107.259 20-day EMA
- SUP 3: 107.125 Low Apr 10
- SUP 4: 106.965 Low Apr 9 and a key support
Schatz futures maintain a firmer tone and sights are on 107.775, the Apr 7 high and bull trigger. The recent pullback between Apr 7 - 9, appears corrective. Clearance of 107.775 would confirm a resumption of the uptrend and open 107.812, a Fibonacci projection. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Firm support to watch lies at 107.259, the 20-day EMA.
EUROZONE T-BILL ISSUANCE: W/C April 21, 2025
Spain, Austria, the Netherlands, France and Greece are due to sell bills this week. We expect issuance to be 14.8bln in first round operations, down from E15.7bln last week.
- This morning, Spain will look to sell E2-3bln combined of the 3-month Jul 4, 2025 letras and the 9-month Jan 9, 2026 letras.
- Also this morning, Austria will come to the market with E1bln of the 3-month Jul 24, 2025 ATB and E1bln of the new 6-month Oct 30, 2025 ATB on offer.
- Additionally this morning, the Netherlands will look to issue E1.0-1.5bln of the 2.5-month Jun 27, 2025 DTC and E1.0-2.0bln of the 5.5-month Sep 29, 2025 DTC.
- This afternoon, France will look to sell up to a combined E7.4bln of 13/24/26/52-week BTFs: E2.8-3.2bln of the 13-week Jul 23, 2025 BTF, E0.1-0.5bln of the 24-week Oct 8, 2025 BTF, E1.3-1.7bln of the 26-week Oct 22, 2025 BTF and E1.6-2.0bln of the new 52-week Apr 22, 2026 BTF.
- To conclude issuance for the week tomorrow, Greece will come to the market with E500mln of the new 26-week Apr 25, 2025 GTB on offer.
JPY: USD/JPY Prints Below 140 For First Time Since September
USD/JPY moves below 140.00 for the first time since September, with the greenback under pressure as U.S. policy uncertainty remains elevated (President Trump’s critique of Fed Chair Powell and ongoing trade war/reallocation headwinds provide the major sources of pressure).
- The pair hits a low of 139.93, with next support located at the 1.382 projection of the Feb 12-Mar 11-Mar 28 price swing (139.79).
- The bearish technical theme has deepened.
