BANGKOK, Thailand – Poon Panichpibool, a market strategist at Krungthai GLOBAL MARKETS, Krungthai Bank, revealed that the Thai baht opened this morning (August 23) at 34.52 baht per US dollar, weakening from the previous day’s close of 34.35 baht per dollar. The baht is expected to trade within a range of 34.40 to 34.80 baht per dollar.
Since last night, the baht has steadily depreciated, breaching the resistance zone at 34.50 baht per dollar (fluctuating between 34.33 and 34.62 baht per dollar). This movement is primarily due to the strengthening of the US dollar, bolstered by better-than-expected US economic data, such as the August services PMI and continuing jobless claims. These results have led market participants to lower their expectations for the Federal Reserve to aggressively cut interest rates.
Furthermore, the baht faces pressure from gold buying flows after the price of gold (XAUUSD) dropped by over $30 per ounce, reaching the $2,470 per ounce zone before slightly rebounding to around $2,480 per ounce. Gold prices have been under pressure from the strengthening dollar and rising US 10-year bond yields, as well as the relatively calm situation in the Middle East.
Today’s key highlight will be Federal Reserve Chairman Jerome Powell’s speech at the annual Fed symposium in Jackson Hole, which markets will be closely monitoring at 9:00 PM Thai time. Krungthai GLOBAL MARKETS anticipates that Powell may signal that the Fed is ready to gradually reduce interest rates at the September meeting as inflation continues to slow and signs of weakness in the US labor market emerge. However, Powell is not expected to indicate a series of aggressive rate cuts or a swift reduction as the market anticipates. Instead, he may emphasize that Fed policy decisions will remain data-dependent.
Market participants will also pay attention to speeches from the European Central Bank (ECB) President and the Bank of England (BOE) Governor during the Jackson Hole symposium to assess the monetary policy outlook for both the ECB and BOE.
Regarding the baht’s outlook, Krungthai GLOBAL MARKETS maintains its view that the baht may gradually weaken, particularly if Powell’s speech does not signal an aggressive -100bps rate cut this year as the market hopes. This scenario could put downward pressure on the baht due to the stronger dollar and rising US 10-year bond yields, which could also weigh on gold prices as they remain in a correction phase. If the baht weakens further, it could test the resistance zone of 34.70-34.80 baht per dollar.
In the meantime, before the market fully digests Powell’s speech, the baht is expected to trade sideways around 34.50 baht per dollar. The baht may receive some support from dollar-selling flows by market participants following its recent depreciation, as well as from foreign investor interest in Thai assets. However, the baht’s strengthening is likely to be limited, with support zones expected around 34.30-34.40 baht per dollar. Technically, Krungthai GLOBAL MARKETS has increasing confidence that the baht will enter a weakening trend after breaking through the 34.40 baht per dollar level clearly last night.
