THAILAND: VIEW: UOB Sees Another 25bp Cut In June But Could Be Delayed
The Bank of Thailand (BoT) cut rates 25bp to 1.75% as was expected given downside risks to growth from the current trade dispute. UOB expects another 25bp cut at the June 25 meeting but believes it could be delayed to allow BoT to keep “sufficient policy space” and give it time to assess the impact of US tariffs and any retaliation. It doesn’t rule out further rates cuts over H2 2025 “should downside risks intensify, particularly from the escalating trade tensions”.
- UOB notes that “The MPC noted that the near-term economic outlook has deteriorated, weighed down primarily by the direct and indirect effects of the U.S. reciprocal tariffs, heightened global trade uncertainty, and a softening tourism sector.”
- “Amid rising downside risks and an increasingly uncertain environment, the Committee adopted a more dovish tone and signaled its readiness to adjust the policy rate should the growth or inflation outlook weaken materially.”
- “The policy rate could be reduced further—potentially reaching 0.50%, as seen during the COVID-19 pandemic—if downside risks to the near-term growth outlook materialize, particularly those stemming from the escalating trade tensions and their adverse effects on the Thai economy.”
- “The MPC views the impact of global trade tensions as unfolding in three distinct stages:
- Stage 1- In the first and second quarters, the impact of global trade tensions on the Thai economy remains uncertain.
- Stage 2 – 2H 2025 onwards, the impact of U.S. tariffs becomes more apparent, with mounting downside risks and the potential for unexpected shocks.
- Stage 3 – A new global equilibrium remains challenging to predict. However, the likely outcomes include a less efficient global economy—characterized by slower growth and higher inflation.”
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BOBL TECHS: (M5) Short-Term Bull Cycle Remains In Play
- RES 4: 119.040 High Feb 28 and a key resistance
- RES 3: 118.950 High Mar 4
- RES 2: 118.382 76.4% retracement of the Feb 28 - Mar 6 sell-off
- RES 1: 118.200 High Mar 31
- PRICE: 117.740 @ 05:47 BST Apr 1
- SUP 1: 117.470 20-day EMA
- SUP 2: 117.080 Low Mar 25 and a ey short-term support
- SUP 3: 116.800 Low Mar 17
- SUP 4: 116.470 Low Mar 12
Bobl futures traded to a fresh short-term cycle high yesterday, before retreating. The contract has breached 117.974, the 61.8% retracement of the bear leg between Feb 28 - Mar 6. The break strengthens the current bull cycle and paves the way for a climb towards 118.382, a Fibonacci retracement. On the downside, initial support to watch lies at 117.470., the 20-day EMA. Key short-term support is at 117.080, the Mar 25 low.
ASIA STOCKS: A Better Day for Stocks as China Leads the Rally.
China Vanke, often viewed as a bellwether for the property sector saw shares up +2.5% in Hong Kong despite missing earnings.
Following the lifting of a ban on short selling, global funds accounted for 90% of the short sales in stocks on the KOSPI on Monday according to exchange data.
Foreign outflows in Taiwan continue unabated and has seen over $3bn leave the market in the last five trading days.
A better day in general for Asian bourses as China’s markets performed well across the board, giving impetus to others.
- China’s Hang Seng lead the way rising +1.06%, gradually pushing it into positive territory over the last five days. The CSI 300 is up +0.29%, Shanghai Comp +0.59% and Shenzhen up +0.90%.
- Taiwan's TAIEX is up strongly despite the outflows, rising by +2.53% for its strongest day since early January.
- Following yesterday’s declines the KOSPI has roared today, rising by +1.94% spurred on by positive economic data releases.
- Having been closed yesterday, Singapore’s Straits Times is playing catch up on yesterday’s regional falls, down -0.20% whilst the Philippines is up for a second day by +0.54%.
- India’s NIFTY 50 has enjoyed a strong period of gains, but is giving back at this morning’s open, down -0.25%.
EURUSD TECHS: Trend Condition Remains Bullish
- RES 4: 1.1083 High Oct 2 2024
- RES 3: 1.1040 High Oct 4 2024
- RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
- RES 1: 1.0861/0955 High Mar 21 / 18 and the bull trigger
- PRICE: 1.0826 @ 05:58 BST Apr 1
- SUP 1: 1.0733 Low Mar 27 and a key short-term support
- SUP 2: 1.0656 50-day EMA and a short-term pivot level
- SUP 3: 1.0602 Low Mar 5
- SUP 4: 1.0548 50.0% retracement of the Feb 3 - Mar 18 bull run
The trend condition in EURUSD is bullish and recent weakness appears to have been a correction. MA studies are in a bull-mode position highlighting a dominant uptrend. 1.0733, the Mar 27 low, marks a key near-term support. A move through it would confirm a clear breach of the 20-day EMA and signal scope for a deeper correction towards the 50-day EMA at 1.0656. Key resistance and the bull trigger is 1.0955, the Mar 18 high.
