THB: USD/THB Eyeing 33.00 Upside Test, New BoT Governor Speaks Today
USD/THB tested above 32.80 in the first part of Friday trade, fresh highs since early Aug (per BBG). We are above all key EMAs except for the 200-day (at 33.03). The 100-day is back around 32.53 (which may now act as a support point) (see the chart below). Broader USD gains, coupled with gold prices back under $4000, are THB headwinds. The pair remains in an uptrend since late Sep, with likely upside focus around the 33.00 level.
- Focus today will be on new BoT Governor Vitai, who holds his first meet the press event at 1pm local time (per BBG). The Shippers council will also hold a briefing at 11am local time to discuss the export backdrop (with baht gains/strength this year having been a focus point).
- The Commerce Ministry noted late yesterday: "The Thai baht is expected to strengthen further following expectations the Federal Reserve’s additional rate cut, which will likely attract capital inflows, Commerce Minister Suphajee Suthumpun says." (via BBG).
- Whilst this recent run higher will be welcomed by the authorities it is not being supported by US-TH yield differentials, which have tracked down a touch since this week's surprise BoT hold (1y1y differential at +202bps).
- USD/THB also looks too higher relative to gold price trends (even with the recent gold correction), but the focus of the authorities is to reduce the strength is this relationship.
Fig 1: USD/THB Versus Key EMAs
Source: Bloomberg Finance L.P./MNI
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MNI: CHINA AUG CPI -0.4% Y/Y VS MEDIAN -0.2%; JUL +0.0%: NBS
- CHINA AUG CPI -0.4% Y/Y VS MEDIAN -0.2%; JUL +0.0%: NBS
- CHINA AUG CPI +0.0% M/M VS +0.4% M/M JUL
- CHINA AUG FOOD PRICES -4.3% Y/Y VS -1.6% Y/Y JUL
- CHINA AUG NON-FOOD PRICES +0.5% Y/Y VS +0.3% Y/Y JUL
- CHINA AUG PPI -2.9% Y/Y VS MEDIAN -2.9%; JUL -3.6%: NBS
- CHINA AUG PPI +0.0% M/M VS -0.2% M/M JUL
FOREX: AUD Crosses - Slightly Higher Within Ranges
US Equities drifted back towards all-time highs as it shrugged off another poor labour input and kept its focus on upcoming rate cuts, ignoring the concerns for growth. This morning US futures have opened slightly higher, E-minis +0.15%, NQU5 +0.05%. The AUD outperformance in the crosses quietly extends albeit within ranges.
- EUR/AUD - Overnight range 1.7761 - 1.7822, Asia is currently trading around 1.7760. The pair has broken through its first support around the 1.7800 area, below there the focus turns to the next support around 1.7600. The wider range remains 1.7600-1.8150.
- GBP/AUD - Overnight range 2.0507 - 2.0551, Asia is trading around 2.0535. The pair continues to find demand towards 2.0500, expect sellers towards 2.0700 initially. The wider range of 2.0400-2.1000 continues to contain.
- AUD/JPY - Overnight range 96.82 - 97.32, Asia is trading around 97.10. The pair topped out towards 97.50 but has consolidated its recent gains. A sustained break above 97.50/98.00 is needed to reignite the upward trend.
- AUD/NZD - Overnight range 1.1098 - 1.1116, the cross is dealing in Asia around 1.1115. The Cross is consolidating around 1.1100, dips back towards 1.1000/1.1050 should be supported now.
Fig 1: EUR/AUD spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
CHINA: Central Bank Injects CNY74.9bn via OMO
- The PBOC issued CNY304bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY229.1bn.
- Net liquidity injects CNY74.9bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.40%, from prior close of 1.47%.
- The China overnight interbank repo rate is at 1.41%, from the prior close of 1.30%.
- The China 7-day interbank repo rate is at 1.50%, from the prior close of 1.45%.
