This morning, the baht strengthened, opening at 33.18 baht/dollar.

The Thai baht opened this morning at 33.18 baht per dollar, strengthening from the previous day's closing level of 33.32 baht per dollar.

September 3, 2569 – Mr. Poon Panichpibul, Money and Capital Strategy Officer at Krungthai GLOBAL MARKETS, Krungthai Bank, revealed that the Thai baht opened this morning at 33.18 baht per dollar, strengthening from the previous day's closing level of 33.32 baht per dollar.

Since overnight, the Thai baht (USDTHB) has strengthened in a sideways-down pattern (fluctuating between 33.10-33.34 baht per dollar) following the sharp weakening of the US dollar. This was in response to the Japanese yen (JPY) rapidly and strongly strengthening from near 160 yen per dollar to 158.22 yen per dollar before weakening back to around 159 yen per dollar.

Amid concerns over the likelihood of intervention in the Japanese yen, including the possibility that the Bank of Japan (BOJ) may proceed with a +25 basis point interest rate hike at its September meeting, statements from some BOJ officials have even reflected the possibility of a +50 basis point increase.

Furthermore, a slight weakening of the dollar helped to gradually support the price of gold (XAUUSD) to rebound to $4,388 per ounce and also helped to boost the Thai baht overnight.

However, the appreciation of the Thai baht remains constrained amidst the ongoing volatile situation in the Middle East, which shows no signs of easing in the short term. This has resulted in high energy prices, including Brent and WTI crude oil. Furthermore, market participants are still hesitant to adjust their positions towards holding US dollars, awaiting the release of US labor market data later this week.

Regarding the trends in the Thai baht (USDTHB) exchange rate.

We maintain our view that the Thai baht faces two-way risk in the short term, depending on changes in market players' views on the Federal Reserve's monetary policy outlook. This will depend on developments in US economic data and the highly uncertain situation in the Middle East. Therefore, market players should employ a more diversified hedging strategy, especially options strategies, which can significantly enhance currency risk management in this highly uncertain market environment.

During the day, we believe the Thai baht's appreciation overnight may slow down somewhat, as market players may want to consider new factors. Furthermore, some market players may be using the rapid and strong appreciation of the Japanese yen to gradually increase their short JPY positions (anticipating a weakening Japanese yen), as evidenced by the views and recommendations to short the JPY from international analysts who generally believe the Japanese yen has potential to weaken above 160 yen per dollar towards the end of the year.

This situation, coupled with uncertainty in the Middle East, will help slow and limit the depreciation of the dollar. If Asian financial markets are in a risk-on mood, similar to the US stock market, it could support Asian currencies. However, we estimate that the appreciation of the Thai baht may be limited to the support zone of 33.00-33.10 baht per dollar (the next support level would be in the 32.80-32.85 baht per dollar range).

While the depreciation of the Thai baht may be limited to the resistance zone around 33.20-33.30 baht per dollar, the possibility of further depreciation remains if market participants increase their likelihood of the Federal Reserve (FED) raising interest rates. This will depend on further US economic data releases and statements from FED officials such as Christopher Waller.

Technically, using a trend-following strategy, the Thai baht remains in an "upward" trend. However, if the baht reverses and weakens, clearly breaking through the resistance zone of 33.50 baht per dollar, it will return to a "downward" trend on the weekly timeframe. (The baht has already returned to a downward trend on the daily timeframe after weakening through the 33.00 baht per dollar zone.)

Looking at the baht's range in the 24 hours, it is expected to be at 33.05-33.30 baht/dollar.

Other market views

The overall sentiment in the US stock market was somewhat supported by a rebound in AI/semiconductor themed stocks, as well as generally positive earnings reports from most listed companies.

However, market players remained hesitant to take on risk amid the ongoing tensions in the Middle East and the risk of the Federal Reserve raising interest rates to control inflation. As a result, the Dow Jones index rose +0.56%, the S&P 500 closed up +0.46%, and the Nasdaq Composite climbed +0.45%.

On the European stock market side , the STOXX 600 index continued to fall by -0.24% amid concerns over the situation in the Middle East and the Russia-Ukraine conflict, which have driven up natural gas prices in Europe. This has added to concerns about inflation prospects and the possibility that European central banks, such as the European Central Bank (ECB), may continue to raise interest rates.

European stock markets received some support, driven by a rebound in AI/semiconductor and healthcare stocks, which continued to perform well recently.

In the bond market, the 10-year US Treasury yield reversed course and edged back down to around 4.78% following mixed US economic data. Market participants still estimate the probability of the Fed raising interest rates twice this year at around 52%. However, the overall risk-on sentiment in financial markets, coupled with continued tensions in the Middle East and concerns about the US government's fiscal position, continues to limit further downward movement in the 10-year US Treasury yield.

Furthermore, we maintain our previous recommendation that market players can gradually purchase long-term US (and Thai) bonds, as current long-term bond yields can absorb the risk should the FED actually proceed with interest rate hikes, as the market anticipates. The FED might choose to raise interest rates 2-3 times this year, potentially pushing the 10-year US bond yield to test the 5.00% zone. This level is below the break-even yield point (the bond yield level at which holding at the current level begins to result in losses in terms of overall return) for the 10-year US bond, which could reach 5.20%-5.30%.

Importantly, we believe that the FED's interest rate hike will pave the way for long-term bond yields to gradually decline over time, as the economy and inflation outlook may slow down. Furthermore, the FED may consider lowering interest rates somewhat next year, making a gradual purchase of long-term US bonds using a "buy on dip" strategy still attractive.

In the currency market , the dollar reversed course and weakened, following the rapid and strong appreciation of the Japanese yen (JPY), amid concerns about potential intervention in the yen and the possibility of the Bank of Japan (BOJ) raising interest rates at its September meeting. However, the dollar remained supported by uncertainty in the Middle East, causing the dollar index (DXY) to fall to the 99.5 point zone (the DXY index fluctuated around 99.4-99.9 points).

In terms of gold prices, the weakening of the dollar helped support a rebound in gold prices (COMEX gold futures for December 2026 delivery). However, further upside to gold remains limited around $4,440 per ounce due to concerns about the situation in the Middle East and the prospect of further interest rate hikes by major central banks.

For the next 24 hours

Key highlights will include the August ISM Services Purchasing Managers' Index (PMI) report, as well as labor market data such as Challenger's Job Cuts and jobless claims.

Meanwhile, market participants will be closely watching statements from Federal Reserve official Christopher Waller (to be released gradually around 7:30 PM Thailand time) to assess the outlook for the Fed's monetary policy, particularly the likelihood of an interest rate hike at the September meeting.

On the Asian side, analysts predict that the Central Bank of Malaysia (BNM) will maintain its policy interest rate at 2.75%, following a gradual slowdown in inflation within BNM's target range. Meanwhile, market participants will be awaiting the release of China's RatingDog Services PMI report for August, as well as key monthly economic data from Vietnam, such as August's retail sales figures, to assess the Vietnamese economic outlook.

In addition to the factors mentioned above, market players will be closely monitoring developments in the Middle East. Simultaneously, market participants will be awaiting earnings reports from listed companies, which could impact the financial market sentiment.

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