THB: USD/THB Edges Higher, FinMin Sees Scope For Further Rate Cuts
USD/THB tracks near 32.525 in latest dealings, slightly above end Tuesday levels. The pair is wedged between the 20 and 50-day EMAs. The recent move above the 50-day EMA (near 32.57) wasn't sustained, which is similar to earlier June and August episodes. Recent lows rest just under 32.40.
- The BoT minutes from the last policy meeting were released earlier, indicating some degree of caution around further rate cuts from the prospective that a prolonged period of lower rates would raise financial stability risks. The Thailand FinMin sees further room to cut rates, while expecting slower growth in H2, but full year 2025 growth to beat the 2.2% forecast.
- The Thailand 1y1y NDIRS rate is just under 1% (against a policy rate of 1.50%). Still, we haven't seen much fresh downside for this rate since the recent break of 1%. US-TH yield differential are moving lower but haven't been a strong driver for THB.
- USD/THB looks a little too high relative to the recent gold price gains, but the divergence isn't large by historical standards. Broader USD/Asia pairs have held up arguably better than expected given recent softness in US yields.
- On the data calendar, IP prints tomorrow, then on Friday BOP/current account and July trade figures are out.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGBS: Futures At Session Highs At Lunch
At the Tokyo lunch break, JGB futures are stronger and hovering near session bests, +34 compared to the settlement levels.
- Today, the local calendar has been empty ahead of 2-year supply tomorrow.
- Cash US tsys are little changed in today's Asia-Pac session.
- Cash JGBs are 3bps richer to 2bps cheaper across benchmarks, with the futures-linked 7-year outperforming. The benchmark 10-year yield is 2.4bps lower at 1.581% versus the cycle high of 1.616%.
- "Two-year JGB auctions typically pass under the radar, but Tuesday's will be spicier than usual as it lands ahead of a Bank of Japan meeting, which is set to deliver guidance on the next policy tightening." (BBG)
- We expect no policy changes at this week’s BOJ policy meeting. The market’s focus will be on the forecast changes in the BOJ’s Outlook Report and the tone of the Governor’s press conference regarding future rate hikes.
- Swap rates are 2bps lower to 1bp higher, with a steeper curve. Swap spreads are mixed.
CHINA PRESS: Industrial Profits Fall In June
China's industrial profits fell 4.3% y/y in June, following May’s 9.1% drop, while first-half profits decreased 1.8%, widening from the 1.1% decline in the first five months, China Securities Journal reported, citing data by National Bureau of Statistics on Sunday. Manufacturing profits rose 1.4% in June, reversing May’s decline of 4.1%, after promotional events accelerated car sales growth and boosted equipment manufacturing demand.
CHINA PRESS: H2 Stimulus Needed - China Finance 40 Forum
China needs further countercyclical policies in H2 to achieve the annual economic growth target, given pressure from tariffs, real estate and limited fiscal resources, according to a Q2 report by the China Finance 40 Forum (CF40). Authorities should fully utilise the funds transferred into the public budget to achieve the annual growth target for broad fiscal expenditure, as well as consider issuing an additional CNY2.3 trillion of government bonds, the report said. According to the current plan, CNY7.6 trillion can be issued from June to December, a lower amount compared to last year, the report noted.
