The baht opened this morning at 32.18 baht/dollar

The Thai baht opened this morning at 32.18 baht per dollar, slightly weaker than the previous day's closing level of 32.08 baht per dollar.

22 April 2559 Mr. Poon Panichphibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank revealed that The Thai baht opened this morning at 32.18 baht per dollar, slightly weaker than the previous day's closing level of 32.08 baht per dollar.

Since overnight, the Thai baht (USDTHB) has gradually weakened, testing the resistance zone of 32.20-32.30 baht per dollar (fluctuating within the range of 32.03-32.32 baht per dollar), amid concerns over the highly uncertain situation in the Middle East, particularly regarding the second ceasefire negotiations.

Meanwhile, US economic data reports consistently came in better than expected. For example, retail sales in March expanded by +1.7% m/m (benefiting somewhat from higher oil prices, but if we consider the Retail Sales Control Group, which excludes highly volatile categories such as automobiles, oil sales, and construction materials, it still expanded by +0.7% m/m, better than expected).

Importantly, Federal Reserve Chair-elect Kevin Warsh reiterated his commitment to a neutral monetary policy, free from political pressure (emphasizing that he received no orders to lower interest rates from President Donald Trump), and his readiness to implement monetary policy to achieve the FED's price stability target (controlling inflation), a goal the FED has failed to achieve since the COVID-19 crisis. This statement was made during his testimony to the Senate Banking Committee before their confirmation as FED Chair.

This situation has led market participants to gradually lower their expectations regarding the Federal Reserve's interest rate cuts. Estimates now place a 36% chance of a rate cut this year, down from a previous 50%-60%. As a result, the US dollar and 10-year Treasury yields have gradually risen (similarly, crude oil prices have benefited from the situation in the Middle East), putting pressure on both gold prices and the Thai baht.

The high level of uncertainty in the Middle East keeps US stock market participants cautious. However, market participants are awaiting earnings reports from listed companies, particularly tech stocks, especially those in the AI/Semiconductor sector. Overall, tech stock performance was mixed; Microsoft rose 1.5% while Apple fell 2.5%. As a result, the S&P 500 closed down 0.63%, and the Nasdaq tech index fell 0.59%.

สำหรับ Trends in the Thai Baht (USDTHB) exchange rate. We maintain our view that the Thai baht remains at risk of two-way fluctuations in the short term, depending on the highly uncertain situation in the Middle East, which could cause the baht to fluctuate within a wide sideways range.

Currently, if signs of a second ceasefire negotiation between the US and Iran emerge, it could support a gradual appreciation of the Thai baht (possibly testing the support zone of 32.00 baht per dollar). However, this appreciation will likely be gradual, as market players will be hesitant to significantly adjust their positions until there is clarity on the ceasefire negotiations. Therefore, the baht may fluctuate sideways around the 32.00 baht per dollar support zone.

However, if the Thai baht strengthens and breaks through the 32.00 baht per dollar support zone, the next support zone will be in the 31.75-31.85 baht per dollar range. We estimate that market players, such as importers, may wait to gradually buy US dollars at this support zone.

Conversely, if the situation escalates, for example, if the US launches more airstrikes against targets in Iran (focusing on energy infrastructure and bridges), it could provoke a strong retaliation from Iran (including a possible closure of the Bab El-Mandeb Strait by the Houthi allies), putting significant pressure on the Thai baht to depreciate sharply, as it strengthens against the US dollar, accompanied by a sharp rise in crude oil prices and another sharp drop in gold prices.

The Thai baht could weaken, breaking through the first resistance zone around 32.20-32.30 baht per dollar and easily testing the next resistance level at 32.50 baht per dollar. If the situation in the Middle East escalates during the weeks of dividend payments to foreign investors, which will significantly impact the baht in late April to early May (dividend payment flows could weaken the baht by around 1%-4%), we estimate there is a chance the baht could weaken again to test the key resistance zone of 33.00 baht per dollar and potentially break through that resistance zone.

Furthermore, Moody's' downgrade of Thailand's credit rating outlook from negative to stable may help mitigate pressure on the baht. This is because foreign investors might slow down their selling of Thai assets, particularly Thai bonds, and could take advantage of the rising long-term Thai bond yields (amidst uncertainty in the Middle East) to gradually purchase long-term Thai bonds. However, selling pressure on Thai stocks may persist if the financial market remains risk-averse and earnings reports from Thai listed companies do not significantly exceed expectations.

We believe the situation in the Middle East remains highly uncertain and could drive financial markets in either direction, depending on developments. This means the Thai baht (and other assets) will continue to face two-way risk due to higher-than-normal volatility. Market players should utilize scenario analysis and options strategies to effectively manage exchange rate risk during periods of high financial market volatility.

Even though the baht has strengthened somewhat, we will not change our view on the baht's trend, which remains "weakening" or at least fluctuating without a clear direction from a technical perspective, according to our Trend-Following strategy. We will only adjust our view to suggest the baht has a chance to strengthen again when it clearly breaks through the support zone of 32.00 baht per dollar on the weekly timeframe.

Looking at the baht's range in the 24 hours, it is expected to be at 32.00-32.35 baht/dollar.

european stock market

On the European stock market side, the STOXX 600 index continued its decline, falling -0.87%, amid uncertainty surrounding the situation in the Middle East. In addition, military and aviation stocks faced heavy selling pressure after Thales plunged -6% following worse-than-expected first-quarter sales reports. However, European stocks received some support from gains in energy stocks, following the upward trend in crude oil prices; for example, BP rose +1.2%.

Bond Market

In the bond market, 10-year US Treasury yields gradually rose, testing the 4.30% zone again, amid uncertainty surrounding the situation in the Middle East, as there is still no clarity on a second ceasefire negotiation. Meanwhile, US economic data generally came out better than expected.

Furthermore, the prospective Fed chair, Kevin Warsh, has not given a clear signal about cutting interest rates, as the market might have expected. This has led market participants to gradually reduce the probability of a Fed rate cut this year to around 36%. The movement of the 10-year US Treasury yield aligns with our view that it will continue to be two-way, depending on the situation in the Middle East, US economic data reports, and corporate earnings, all of which will affect market sentiment regarding the Fed's monetary policy. This keeps bond market volatility high.

However, we maintain our previous recommendation that market players should wait for the right moment to gradually purchase long-term US and Thai bonds. Furthermore, gradually purchasing 10-year US bonds when yields exceed 4.25% (which is the Fair Value level we estimate from our ACM and Yield Spread models) allows market players to see bond yields rise by another approximately +40bps before reaching the break-even point. This supports the risk of the market expecting the FED to raise interest rates 1-2 times this year. (Most recently, we have revised our view to suggest the FED still has the potential to cut interest rates one more time towards the end of the year if the situation in the Middle East does not escalate and become more prolonged than expected.)

currency market

In the currency market, the dollar reversed course and strengthened in a sideways-up pattern, coinciding with the gradual rise in US 10-year bond yields. This followed market participants lowering their expectations for a Federal Reserve interest rate cut due to uncertainty surrounding the second ceasefire negotiations between the US and Iran. Combined with better-than-expected US economic data, the overall dollar index (DXY) rose to around 98.3 points (the DXY index fluctuated between 98.1 and 98.6 points).

In terms of gold prices, market participants' expectations for more dovish monetary policies from central banks, amidst uncertainty surrounding the second ceasefire negotiations between the US and Iran, have pressured gold prices (COMEX gold futures for June 2026 delivery) to retreat to the $4,700 per ounce zone. However, the price eventually found some support and rebounded to the $4,750 per ounce zone, amidst cautious market sentiment.

Over the next 24 hours, market participants will be closely watching the U.S. crude oil inventory report, which could impact crude oil prices, particularly WTI crude.

On the European side, market participants will be awaiting the UK's March CPI and PPI inflation reports, which will reflect the impact of the situation in the Middle East and could affect market sentiment regarding the Bank of England's (BOE) monetary policy stance. In addition, market participants will be watching statements from officials at the Bank of England and the European Central Bank (ECB) to assess the direction of monetary policy at both major central banks.

Meanwhile, in Asia, analysts believe that the Bank of Indonesia (BI) may keep its policy interest rate unchanged at 4.75% in order to stabilize the rupiah (IDR), which is facing significant weakening pressure from the situation in the Middle East.

In addition to the factors mentioned above, market participants will be monitoring developments in the highly uncertain situation in the Middle East, particularly the prospects for a second ceasefire between the US and Iran, while also awaiting earnings reports from listed companies.