25Aug14 Review Last Monday, as we have anticipated, Thailand 2Q GDP growth expanded at 0.4% YoY better than the market expects (expt. 0.00%, prev. -0.60%). However, details showed weakness in wage growth and industrial utilization. USDTHB dropped lower from 31.86 to 31.82 before surge higher to 32.07 upon good U.S housing data, then drop lower after failure to find ground above 32.00 and closing out at 31.95. In general, US dollar is appreciating against all others. US Dollar Index is at its highest level since September 2013. This has affected the flows, retrieving some of the cash away from Asia to elsewhere. Nevertheless, SET Index managed to rise above 1550, the resistance level, now trading at 1557 pnts. FX Swap market edged slightly higher with buying interests in 1Yr USDTHB from some of foreign banks. THBFIX6M rose slightly higher from 1.93821 to 1.9495 6Mo USDTHB indicative closing price 25.65/25.85 “Worth to note” Apart from the good US economics data which almost everyone had anticipated last week, China PMI came out poorly missing the market estimate by A LOT. HSBC China Manufacturing PMI previously reported at 51.7 while the market expect a slight pull back on the figure at 51.5, but the actual figure stands at 50.3. its previous high in early 2013 was at 52 something. This caused a pull back in downtrend of USDCNH from 6.136 up to 6.16 level. however, judging from the the market reactions towards the disappointing data, we think the market is still pretty bullish on CNH. Also USDCNH points could go even higher considering the current economics and liquidity situation of China (expect 6Mo USDCNH at 1,000 points by 1Q15). Preview Next week awaits Thailand July Trade Balance which is likely to demonstrates improvement of post coup economics. SET Index stands above our key resistance level at 1550 we expect further rise from here on. Despite the fact that US dollar is strengthening in trend, we still think that players in global markets are gradually reallocating their portfolio into a riskier assets on expectation of U.S. Recovery. We expect inflows into Asia emerging markets, Especially in equities markets. Gen Prayuth got appointed as Thailand 26th Prime Minister last week. We think the market is monitoring closely on how the government house structure. Uncertainty remains on this matter. Hence, this could trigger some market actions. Considering the current inflow into EM Asia and Thailand political situation now relatively stable.We think there’s still room for Thai Baht to appreciate further along with regional currencies. We look to see USDTHB trading at 31.50 level soon. Our Entry for USDTHB is at 31.95 Target 31.65 stop at 32.10. Considering the Thailand key rate 2.00% and no further rate cut is expected for the year, we look to pay 6Mo USDTHB at 24 (Implied Interest rate yield 1.77 to 1.79%). We think geopolitical risks may drive forward market further down. USDTHB6M now at 1.90727%. 6Mo USDTHB will trade in range between 24-27 points. Our Entry for 6Mo at 24 target 26.50 stop at 23. Seems like Paretos rules works after all GBPUSD still on a downward leg. Retail players now going against the market USDJPY is MASSIVE! now dooddling around the 104 handle Im still super bullish on the pair Idea and Comment by Happyness t
Posted on: Sun, 24 Aug 2014 12:32:09 +0000
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