THB: USD/THB Testing Higher Despite BoT Hold, Lower Gold A Factor
USD/THB is breaking higher, the pair last above 32.60, this is fresh highs back to mid to late August. We are also through the 100-day EMA resistance point, see the chart below. Yesterday's surprise on hold outcome from the BoT only provided fleeting support to THB (lows of 32.3950 for USD/THB). As we noted earlier this is likely to represent a question of timing around further easing rather than a policy shift. The October decision seems to be about timing as the MPC believes policy should remain accommodative as growth needs support. It will continue to monitor risks and “macro-financial developments”.
- BBG also noted the broader sell-side consensus remains for THB weakness. "Strategists expect the Thai baht to depreciate in the medium term, with some predicting it will move toward the 33-level target and recommending taking long positions in both USD/THB and EUR/THB." (from late yesterday).
- The THB NDIRS 1y1y rate is higher, but at 1.01% is still within recent ranges. US-TH 1y1y yield differentials sit off recent highs at +204bps.
- Notably today, gold is down around 0.60%, (albeit still above $4000), with some safe haven demand potentially reduced post the Gaza peace deal agreement.
- This may be aiding THB underperformance at the margins.
Fig 1: USD/THB Through 100-day EMA Resistance
Source: Bloomberg Finance L.P./MNI
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ASIA STOCKS: Equity Flow Update for Major Regional Bourses
Taiwan’s inflows continue.
- South Korea: Recorded outflows of -$19m yesterday, bringing the 5-day total to +$591m. 2025 to date flows are -$5,211m. The 5-day average is +$118m, the 20-day average is -$18m and the 100-day average of +$65m.
- Taiwan: Had inflows of +$691m yesterday, with total inflows of +$2,754 m over the past 5 days. YTD flows are positive at +$2,489m. The 5-day average is +$551m, the 20-day average of -$96m and the 100-day average of +$219m.
- India: Had outflows of -$78m as of the 3rd, with total outflows of -$2,088m over the past 5 days. YTD flows are negative -$15,692m. The 5-day average is -$418m, the 20-day average of -$215m and the 100-day average of -$3m.
- Indonesia: Had outflows of -$32m yesterday, with total outflows of -$286m over the prior five days. YTD flows are negative -$3,359m. The 5-day average is -$57m, the 20-day average +$18m and the 100-day average -$15m.
- Thailand: Recorded outflows of -$45m yesterday, with outflows totaling -$34m over the past 5 days. YTD flows are negative at -$2,531m. The 5-day average is -$7m, the 20-day average of -$42m and the 100-day average of -$14m.
- Malaysia: Recorded outflows yesterday of -$19m, totaling -$142m over the past 5 days. YTD flows are negative at -$3,825m. The 5-day average is -$28m, the 20-day average of -$32m and the 100-day average of -$10m.
- Philippines: Recorded outflows of -$6m yesterday, with net outflows of -$31m over the past 5 days. YTD flows are negative at -$731m. The 5-day average is -$6m, the 20-day average of -$5m the 100-day average of -$4m.
FOREX: JPY Crosses - Held Onto Most Of Early Monday Morning Gap Gains
US Equities are consolidating as the market contemplates what the next potential driving factor will be, interest rate cuts or the slowdown in growth that leads to the cuts. This morning US futures have opened pretty muted, E-minis -0.02%, NQU5 -0.02%. The JPY crosses, unlike USD/JPY for the most part, have held onto their gains from the gap higher on the Monday Asian open.
- EUR/JPY - Overnight range 173.07 - 173.66, Asia is trading around 173.45. The pair consolidated its gains above 1.7300 eventually stalling towards 174.00. I remain skeptical but price action is hard to ignore, let's see if the price can break above 174.00 and extend.
- GBP/JPY - Overnight 199.37 - 200.15, Asia trades around 199.80. This pair stalled again just above 200.00 overnight, a clear sustained break above 200.00 is needed to regain momentum higher.
- NZD/JPY - Overnight range 87.39 - 87.79, Asia is currently dealing 87.50. The pair grinded even higher than the gap on the open, perhaps reflecting positioning ? I would start questioning the short should the price sustain a break back above 88.00.
- CNH/JPY - Overnight range 20.6889 - 20.7777, Asia is currently trading around 20.6900. This pair has remained above its pivotal 20.30/20.40 support. The pair continues to trade comfortably within its recent 20.40-21.00 range. A sustained break back above 21.00 is needed to potentially begin an extension higher.
Fig 1 : GBP/JPY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
USD: BBDXY - USD Trades Heavy, Probing Below 1200
The BBDXY range overnight was 1198.47 - 1202.74, Asia is currently trading around 1198, -0.05%. The USD trades very heavy as the moves in US yields start to take their toll. The headwinds for the USD seem to be compounding and a look below 1195 feels almost inevitable. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows. Should the USD start another leg lower it would have big implications for FX and potentially see a lot of the recent ranges in G10 broken.
- Lance Roberts(RIA) - “Today we will also get the annual revisions to the BLS employment report. That adjustment will likely show that over the last 12-months somewhere between 550,000 to 800,000 fewer jobs were created than originally reported based on the QCEW report. The bond market responded as expected. Bond yields fell as investors realized the disinflationary impact of slower employment and wage growth would increase recession risk. If the revisions to employment show a substantially weaker than expected outcome, bond yields will likely fall further.”
- MNI INTERVIEW: US Job Market At Potential Pivot Point - Shin. A raft of soft U.S. jobs data adds weight to Fed Chair Jerome Powell's view that labor market risks have increased, though central bank officials need more time to determine whether employment has hit a pivot point, Yongseok Shin, a St. Louis Fed research fellow and economist at Washington University in St. Louis, told MNI.
- Bloomberg - Dollar Bears Undeterred by Heightened Political Risk Elsewhere. Despite no shortage of rapid political developments around the globe (both Japan and France will soon have new prime ministers), the dollar’s post-payrolls decline remains firmly intact.”
- Data/Events : NFIB Small Business Optimism, Prelim. Benchmark Payrolls Revision
Fig 1: BBDXY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
