The baht opened at 36.54 baht/dollar, strengthening from a weak dollar - gold prices rebounded.

Mr. Poon Panichpibul, Money and Capital Market Strategist at Krungthai GLOBAL MARKETS, Krungthai Bank, revealed that the Thai baht gradually strengthened overnight (fluctuating between 36.55 and 36.76 baht per dollar), supported by the weakening of the US dollar following a decline in the 10-year US Treasury yield after some Federal Reserve officials commented that the Fed may need to reduce its interest rate hikes.

Furthermore, the weakening of both the US dollar and 10-year US Treasury yields has supported a rebound in gold prices (COMEX December gold futures), allowing them to stabilize around $1,870 per ounce. We expect that profit-taking in gold also contributed to the strengthening of the Thai baht.

Players in the US stock market continued to seek additional risk, despite the ongoing conflict between Israel and Hamas weighing on financial markets. However, the US stock market was supported by comments from some Federal Reserve officials suggesting that the Fed may not need to continue raising interest rates. This led to a slight pullback in the 10-year US Treasury yield and boosted large-cap and growth stocks (Tesla +1.5%, Nvidia +1.2%), resulting in the S&P 500 closing up 0.52%.

On the European stock market side, the Stoxx 600 index reversed course and surged more than 1.96%, supported by signals from some central bank officials, including the Federal Reserve and the European Central Bank (ECB), indicating their willingness to support a halt in interest rate hikes. This view led to a decline in long-term bond yields and boosted tech and growth stocks (LVMH +3.2%, ASML +3.1%).

In the bond market, cautious stances from market players regarding the war situation and statements from some Fed officials suggesting that the Fed may not need to raise interest rates continue to keep the 10-year US Treasury yield fluctuating near 4.65%. The 10-year US Treasury yield has yet to show a clear upward trend, possibly because some market players are awaiting the US CPI inflation report on Thursday. This means long-term bond yields remain at risk of further volatility. However, we still recommend a "buy on dip" strategy when bond yields rise.

In the currency market, the US dollar gradually weakened against major currencies, with the dollar index (DXY) declining to near 105.7 points (ranging from 105.6-106.1 points). Some investors may be reducing their holdings of the dollar as a safe-haven asset, as gold and the Japanese yen (JPY) may be more attractive safe-haven assets with more potential upside.

Furthermore, the dollar was also pressured by views from some Fed officials who indicated that the Fed may not need to continue raising interest rates. As for gold prices, the decline in both the 10-year US Treasury yield and the dollar resulted in a rebound in gold prices (COMEX December gold futures) to fluctuate near $1,870 per ounce. This rebound in gold prices may have encouraged market participants to gradually sell off their holdings to take profits, and this transaction flow contributed to the strengthening of the Thai baht.

For today, market players will continue to monitor the situation of the Israeli-Hamas war. Will it intensify or will the war expand and affect the entire Middle East region?

In addition, in the economic data report section Market players will wait and see. Report on the Producer Price Index (PPI), which may help reflect the trend of inflation in the US. More importantly, the market will wait to keep an eye on the statements of Fed officials, including the minutes of the latest Fed meeting (FOMC Meeting Minutes).

Regarding the Thai baht's outlook , we believe the strengthening momentum has returned faster than we expected. The baht has gradually appreciated, breaking through support zones at 36.80 baht per dollar and 36.60 baht per dollar, partly driven by the weakening of the US dollar and the rebound in gold prices.

In addition, the appreciation of safe assets The Japanese Yen (JPY) during this period also encouraged some players to gradually sell the Japanese Yen (JPYTHB almost reached the level of 24.80 baht per 100 yen, which is the highest level since July).

However, the appreciation of the baht may slow down somewhat. This is because market players may not be in a hurry to adjust their holding positions. Until the US CPI inflation report is received on Thursday.

Furthermore, if the war escalates or spreads, it could lead to higher crude oil prices. This situation could put downward pressure on the Thai baht, or at least slow its appreciation, due to concerns about a trade deficit, which would pressure Thailand's current account balance.

Meanwhile, foreign investor fund flows may remain volatile (currently, foreign investors are showing a mix of net buying and net selling). Importers may also be waiting to gradually buy more US dollars after the Thai baht managed to strengthen again.

However, we still assess the baht's resistance zone at 37.25 baht per dollar. and maintain the same view that The baht may not depreciate more than 37.50 baht per dollar. (as we have assessed since September 26) while if the baht can continue to strengthen Until it clearly broke out of the support zone of 36.50 baht per dollar. It may not be difficult to see continued appreciation, testing the 36.25-36.30 baht per dollar zone.

It is possible that The appreciation continued until it broke out of the zone of 37.00 baht per dollar. This may cause some market players to return to the Long THB side (viewing the baht as strengthening) if the stop loss point is set at 37.50 baht per dollar. The starting point for taking profits is around 36.00 baht per dollar.

We still view Every asset is still in a period of high volatility. from both the uncertainty of the direction of monetary policy Concerns about the prospect of Chinese economic recovery causing us to maintain the advice that Entrepreneurs should use a variety of hedging tools, such as Options, to increase efficiency in hedging against exchange rate risk.

And in addition to using the aforementioned tools Choosing to transact in local currency is another interesting way to manage exchange rate risk. Entrepreneurs should compare transaction costs and hedging plans before making every decision.

Looking at the baht today It is expected to be at the level of 36.35-36.65 baht/dollar.

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