THAILAND: Large October Trade Deficit, Softer Exports Could Drive Easing
Thailand recorded its largest customs trade deficit at $3.44bn since January 2023 as import growth materially exceeded exports. September posted a surplus of $1.28bn. Shipments slowed in October to 5.7% y/y from 19% while imports were up 16.3% after 17.2%, higher than expected. The data can be volatile and the 3-month average of export growth was still up 10.2% y/y in October. Releases over the months ahead will be important to determine if shipments are slowing, which would be a concern for an economy struggling with sluggish growth and possibly drive further monetary easing.
- A sustained trade deficit may reduce some of the appreciation pressure on the baht, which both the central bank and government would like to see. The BIS THB NEER is up 1.0% m/m in November and USDTHB looked through the October trade data and is down 0.4% to 32.36 today.
- Thailand’s Commerce Ministry said the pickup in October imports was driven by an increase in raw material and capex imports from China, while Thailand’s exports to China rose 9.3% y/y. China’s shipments to Thailand rose 6.9% y/y in September but fell 3.3% y/y in October.
- Thailand is one of the most exposed countries in the region to the US with 20% of total 2024 exports worth around 11% of GDP going to there. It imposed 19% tariffs on Thailand in July which may be pressuring its exports as well as generally softer global demand following the increase in protectionism.
- The Bank of Thailand has cut rates 75bp this year to support lacklustre growth. It meets again on 17 December.
Thailand customs exports vs imports y/y% 3-mth moving average
Source: MNI - Market News/LSEG
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FED: MNI Fed Preview - October 2025: QT, Or Not QT
MNI's preview of the October FOMC has been published - Download Full Report Here
- The Federal Reserve is overwhelmingly expected to cut the funds rate by 25bp for a 2nd consecutive meeting on October 29, bringing the target range to 3.75-4.00%.
- This will again be framed as a risk management cut, with the limited data available since the September meeting not disconfirming that the shift in the balance of risks had tilted toward labor market downside.
- Dissent to this decision should once again be limited to Gov Miran in favor of a 50bp cut.
- With limited new developments and official data to opine on, Chair Powell’s press conference will be eyed for affirmation that a December cut remains on track, as signalled by the most recent Dot Plot.
- He’s unlikely to give much away, but it would be surprise given the lack of data and relevant developments if he suggested that a further 2025 cut was in any greater doubt than it was 6 weeks earlier.
- Instead, we think focus in terms of action at this meeting will be on the balance sheet, with the Fed likely to announce an end to quantitative tightening amid diminishing reserve levels and nascent evidence of funding market pressures.
- We will also be watching for any news on the Fed’s communications framework, with an updated “Dot Plot” potentially unveiled at some point by year-end.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Oct 27
RATINGS: Moody's Lowers France's Outlook To Negative, Maintains Aa3 Rating
Moody's has lowered its outlook on France to negative from stable.
- Moody's was expected to at least lower the outlook, so this is not a surprise - there had been some risks perceived of a downgrade to A1 (from Aa3) in the domestic and foreign currency long-term issuer and domestic-currency senior unsecured ratings.
- Per the Moody's release: "The decision to change the outlook to negative reflects the increased risk that the fragmentation of the country's political landscape will continue to impair the functioning of France's legislative institutions. This political instability risks hampering the government's ability to address key policy challenges such as an elevated fiscal deficit, rising debt burden, and durable increase in borrowing costs, thus leading to a more rapid weakening in France's key fiscal metrics than we currently expect."
- Both S&P and Fitch have already downgraded France’s sovereign rating to the single-A bucket this year.
USDCAD TECHS: Corrective Pullback
- RES 4: 1.4200 Round number resistance
- RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.4111 High Apr 10
- RES 1: 1.4080 High Oct 16 and the bull trigger
- PRICE: 1.4016 @ 16:33 BST Oct 24
- SUP 1: 1.3979/3907 20- and 50-day EMA values
- SUP 2: 1.3829 Bull channel base drawn from the Jul 23 low
- SUP 3: 1.3769 Low Sep 19
- SUP 4: 1.3727 Low Aug 29 and a bear trigger
USDCAD has pulled back from its recent highs. The trend condition is bullish and a move lower is considered corrective. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4111, the Apr 10 high, and further out, scope is seen for an extension towards 1.4167, a Fibonacci retracement. First key support lies at 1.3907, the 50-day EMA. Support at the 20-day EMA lies at 1.3979.
