THB: USD/THB Close To Sep Highs, Exports Miss, Tourism Inflows Weaker
USD/THB tracks in 31.90/95 region in latest dealings, up close to 0.40% versus end Tuesday levels. Recent highs near 31.97 remain intact. We are also below all key EMAs, with the 20-day near current spot levels, while the 50-day is near 32.22 (and arguably a more important resistance point).
- Still, the wedge between USD/THB and gold levels continues to widen. Fresh highs in bullion is not aiding fresh THB gains at this stage. Sentiment around THB has certainly softened amid a wave of BoT and government rhetoric.
- A short while ago we had August customs trade data, which was weaker than forecast from a export growth and trade balance perspective. Export growth slowed to 5.8%y/y from 11.0% prior, while the trade deficit was nearly -$2bn, well beyond the $516mn forecast (import growth was nearly double market forecasts at 15.8%y/y).
- Thailand officials noted the stronger baht is impacting exports, while the tariff impact is expected to intensify in Sep. Still, officials expect export growth to exceed the 2-3% forecast this year.
- Other data from late yesterday showed weekly tourism arrivals down 12%. Via BBG: "Year-to-date, foreign arrivals fell 7.4% y/y to 23.5 million". We get August current account data next week. Tourism inflows are typically stronger as we approach year end.
- These recent data misses and underlying domestic softness will see continued focus by the new government on efforts to boost growth and temper THB outperformance.
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US TSYS: Yields Retrace Some Of Fridays Move
The TYU5 range has been 112-01 to 112-05 during the Asia-Pacific session. It last changed hands at 112-01+, down 0-03 from the previous close.
- The US 2-year yield has edged higher trading around 3.715%, up 0.02 from its close.
- The US 10-year yield has retraced higher trading around 4.27%, up 0.02 from its close.
- 10-Year Yields held its 4.35% pivot area perfectly and Powell gave the market a reason to add to longs helping yields move lower. While this area continues to hold, bounces should be met with demand. First target the recent lows around 4.18% then the bottom of the range towards 4.10% comes back into focus.
- RenMac on X: “This is about September. If you get solid data, you’ll get a hawkish cut in September. If you get bad data, you’ll get a dovish cut. That’s how to think about this. Through the lens of an insurance cut being green lit in September. Importantly, Powell is accepting the Waller framing of the world. We had a shadow chair already. Time to give him the job.”
- MNI: US Debt-To-GDP At 250% May Not Push Up Rates - JH Paper. The supply of U.S. debt over the next 75 years will eventually outstrip demand and force interest rates higher, though large fiscal adjustments could allow debt-to-GDP levels to increase sharply over time without pushing up interest rates, according to research presented Saturday to the Federal Reserve's annual economic symposium in Jackson Hole.
- MNI BRIEF: Trump - Will Fire Fed's Cook If She Doesn't Resign. President Donald Trump said Friday he will fire Federal Reserve Governor Lisa Cook if she does not resign from her position. “I’ll fire her if she doesn’t resign,” Trump told reporters at the Kennedy Center. “What she did was bad, so I’ll fire her if she doesn’t resign,” he said.
- Data/Events: Building Permits, New Home Sales, Dallas Fed Manf. Activity
Fig 1: 10-Year US Yield 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA STOCKS: China Rallies As Shanghai Housing Curbs Eased, Japan Lags
Asian equity markets are mostly up in the first part of Monday trade, with tech related indices outperforming. China property stocks are also up strongly. The main exception is Japan markets, which are closer to flat. US equity futures are down slightly in latest dealings, after strong cash gains following Powell's dovish rhetoric on Friday at Jackson Hole. Key offshore event risks this week are US inflation data and earnings from tech bellwether Nvidia.
- Japan markets are a touch higher, with the NKY 225 up around 0.25%, while the Topix is marginally higher. USD/JPY is up slightly today, after falling nearly 1% on Friday, so this may be trimming risk appetite at the margin today. The transportation sub index for the Topix has fallen by 0.46% so far today.
- In Hong Kong the HSI is up over 2%, while the HSTECH sub index is up over 3%. The CSI 300 on the mainland is up close to 1.4%. Onshore analysts expect further support for consumers via the trade-in policy (per CSJ), while headlines have also just crossed of easing Shanghai home buying curbs. Details so far point to buying limits being lifted in outer suburbs, while some households will be exempt from the first home property tax (via BBG). The CSI 300 real estate sub index has surged so far today, up close to 5.8%, putting the index at multi month highs.
- Taiwan's Taiex is up close to 2.5% after strong offshore selling last week weighed on the local bourse. The Kospi is up over 1% at this stage.
- In South East Asia, gains are a little more muted, although Indonesia is doing well, up over 1%. Thailand shares are +0.70%, but gains elsewhere are more modest.
- Australia's ASX 200 is up over 0.40%, last above 9000, which fresh record highs.
FOREX: JPY Crosses - Trade Sideways As USD Collapses Across The Board
US equities exploded higher in the Friday N/Y session as the market reacted to what it interpreted to be a very dovish speech. This morning US futures opened a little lower, ESU5 -0.15%, NQU5 -0.17%. The JPY crosses traded sideways for the most part as the USD took the brunt of the reaction across the board.
- EUR/JPY - Friday night range 171.83 - 172.68, Asia is trading around 172.45. This pair’s move higher looks to be stalling for the moment. A sustained break above 173.00 could see momentum pick up and the uptrend regain the upper hand.
- GBP/JPY - Friday night 198.33 - 199.53, Asia trades around 199.05. This pair consolidated on a 198 handle on Friday night. A sustained break above 200.00 is needed to see momentum higher restored.
- NZD/JPY - Friday night range 86.00 - 86.46, Asia is currently dealing 86.40. The pair broke through its support around 86.50 on the back of a dovish RBNZ last week. This was a powerful move lower and if sustained should now see bounces met with supply. Any bounce back towards 87.00/87.50 should see sellers first-up, the huge bounce in risk does offer some pause for those looking for the pair to extend lower.
- CNH/JPY - Friday night range 20.4349 - 20.7058, Asia is currently trading around 20.5700. This pair has again bounced off its pivotal 20.30/20.40 support. A sustained break back below 2.3000 is needed to turn momentum lower again, until then it looks comfortable in a 20.4000-20.9000 range.
Fig 1 : NZD/JPY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
