Mr. Poon Panichphiboon, Money Market Strategist, Capital Market Krungthai GLOBAL MARKETS Krung Thai Bank revealed that the baht opened this morning on December 1, 2022 at a level of 35.05 baht per dollar. “Very valuable” from the previous day’s close at 35.26 baht per dollar. by looking at the baht frame today it is expected to be at 34.95-35.20 baht per dollar.
The players in the US financial market All of them eased their concerns about the possibility of a Fed rate hike and they continue to open up to full risks. Like other Fed officials, Fed Chairman Jerome Powell supported a slower rate hike. That Fed rate increase will continue. until the Fed achieves its goal of controlling inflation And the current policy interest rate is still far from the highest point (Terminal Rate).
The Fed is likely to slow accelerating interest rates. As a result, US 10-year bond yields fell by more than -17bps to 3.62%, prompting market players to return to buying tech and growth stocks (Nvidia +8.2%, Meta +7.9%, Microsoft +6.2% ) As a result, the Nasdaq technology stock index rose faster than +4.41%, while the S&P500 closed +3.09%.
In European stocks, Europe’s STOXX600 index rose +0.63%, supported by hopes that China could ease COVID-19 containment measures more quickly to ease pressure from the protests. As a result, stocks of brand name products and commodity stocks all rose (Dior +4.4%, Hermes +3.9%) In addition, the Eurozone inflation report in November slowed to 10%, less than expected on the market. It also increases the likelihood that the European Central Bank (ECB) may delay accelerating interest rates. Leading to market players returning to buy tech stocks again (Adyen +2.6%)
in the currency market The prospect of the Fed slowing rate increases has encouraged market players to be more open to risks and reduce their holdings of safe haven assets such as the dollar, putting pressure on the dollar to weaken. compared to the base currency The dollar index (DXY) fell to 105.8 points. In addition, the drop in the dollar and the US 10-year bond yield put pressure on gold prices. (the COMEX gold contract to be delivered in February) rose sharply to $1,788 an ounce. which we consider Rebound of such gold prices May cause some players to sell and make a profit of gold. Such transaction flow also contributes to the appreciation of the baht.
For today, market players will wait to assess the US economic outlook. Passing the Manufacturing Purchasing Managers’ Index (ISM Manufacturing PMI) report in November. The market expects the manufacturing PMI to fall to 49.8 points (below 50 points means contraction), reflecting the sluggish economic activity in the manufacturing sector. Amid pressure from the Fed to accelerate interest rates and slow the global economy.
in the Thai side The market estimates that pressure from the global economic slowdown and sluggish economic recovery in China will cause Thailand’s manufacturing sector to expand more slowly. It can drop to a level of 51 points
Although the trend of the baht is seen, the financial market atmosphere is back to being fully open to risks. supports the baht to have a chance to appreciate following the devaluation of the dollar Including profitable transaction flow, rebound in the gold price. And there may still be support from the fund’s flow of foreign investors who may return to buy more Thai stocks during this period.
However, the rapid appreciation of the baht may start to slow down and we must keep an eye on that The baht will be able to appreciate beyond the key support zone around 35.00 baht per dollar or not because if the baht is appreciate outside the zone There is a chance that the baht will continue to appreciate close to the level of 34.80 baht per dollar easily. If the factors supporting the appreciation of the baht do not change As for the resistance zone of the baht, the range is estimated to be 35.30-35.40 baht per dollar. It may be a resistance zone in the short term. Because exporters are still not in a hurry to sell the dollar and most may wait for the moment when the baht weakens. to gradually sell the dollar
However, the recent high volatility of the baht reflects the need for greater diversification of hedging tools, recommending entrepreneurs to use a more diversified exchange rate hedging strategy. Especially the use of options, which will increase the efficiency of hedges during the period of heavy market volatility.