THB: USD/THB To Fresh Multi Week Highs, Tourism & Tariff Concerns Impacting
USD/THB has tracked higher in the first part of Wednesday dealings, were we last near 34.15/20, up around 0.20% for the session. Session highs rest at 34.22. Early March highs in the pair were around 34.32, while the 200-day EMA is further north at 34.36. The pair is above all other key EMAs, with the 20 and 50-days back around the 33.90 level on the downside.
- Concerns around the economic impact from the recent earthquake have likely weighed on THB. Focus is likely to rest on any sustained slowdown in tourism arrivals. Data for March showed tourist arrivals were down 12.8% versus Feb, but this is typically a slower month from a seasonal standpoint. China tourists have cancelled flights in response to the earthquake (BBG noted, quoting Tourism Minister Sorawong Thienthong on Monday).
- Headlines have also crossed a short while ago around potential tariff fallout. An official stated that Thailand could see $7-8bn lower exports to the US if the Trump administration raises tariffs by 11% (see this BBG link).
- Local interest rates continue to track lower. Even with lower US rates, the US-TH 2yr government bond yield differential is up from March lows, last at +224bps, and is supportive of higher USD/THB levels. The 2yr Thailand government bond yield is sub 1.70%.
- The next key data point from a BoT standpoint will be Friday's CPI print.
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STIR: RBA Dated OIS Pricing Mixed Vs. Pre-RBA Decision Levels
RBA-dated OIS pricing is flat to 3bps firmer across meetings today.
- Nevertheless, pricing remains mixed compared to February’s pre-RBA Decision levels—meetings through July are 2-5bps firmer, while those beyond are 2-9bps softer.
- Last week, January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The first month of the quarter has limited updates for services inflation. The seasonally adjusted data is consistent with the RBA remaining cautious with it stating that “upside risks remain”.
- A 25bp rate cut in April is given a 9% probability, with a cumulative 57bps of easing priced by year-end (based on an effective cash rate of 4.09%).
Figure 1: RBA-Dated OIS – Today Vs. Pre-RBA Levels
Source: MNI – Market News / Bloomberg
CHINA PRESS: Two Session To Highlight Consumption, Tech Innovation
Authorities are expected to focus on promoting consumption and developing AI, and other emerging sectors during the upcoming “Two Sessions” this week, China Fund News reported, citing analysts. Except for the trade-in program for consumer goods, more medium- and long-term measures to boost spending are also expected, such as offering maternity allowance and supportive measures for pension and social security, said Zhu Guoqing, deputy general manager at Pengyang Fund.
CHINA PRESS: PBOC To Boost Financing Support For SMEs
The People’s Bank of China will guide banks to support private and small business through increased lending using structural monetary policy tools, and further facilitate diversified financing channels via stocks, bonds and loans, according to a meeting held by the PBOC and four other departments. Officials needed to improve the credit enhancement system for private and small firms, accelerate the issuance of regulations on supply chain finance, and strengthen bond market product innovation, the meeting said. (Source: PBOC website)
