This morning, the baht strengthened, opening at 32.90 baht/dollar.

The Thai baht opened this morning at 32.90 baht per dollar, strengthening from the previous day's closing level of 33.01 baht per dollar.

On September 4, 2569, Mr. Poon Panichpibul, a money and capital market strategist at Krungthai GLOBAL MARKETS, Krungthai Bank, revealed that the Thai baht opened this morning at 32.90 baht per dollar, strengthening from the previous day's closing level of 33.01 baht per dollar.

Since overnight, the Thai baht (USDTHB) has gradually strengthened, breaking through the support zone of 33.00 baht per dollar and approaching the next support zone at 32.85 baht per dollar (fluctuating within the range of 32.88-33.03 baht per dollar). This is due to the weakening of the US dollar, following the continued strengthening of the Japanese yen (JPY) (contrary to our previous forecast), nearing the 155.30 yen per dollar zone.

Amid concerns about potential intervention in the Japanese yen and the Bank of Japan's (BOJ) interest rate hike prospects, some market players have reduced their short JPY positions (anticipating a weaker yen), leading to stop-loss/cut-loss orders and supporting the strengthening of the Japanese yen.

Furthermore, the dollar faced additional pressure from statements by FOMC committee member Christopher Waller, who indicated that “we are beginning to see signs of a slowdown in US inflation and will be watching the August CPI report.”

"If inflation does not slow down, we may consider voting to raise interest rates." Market participants interpreted this statement as less hawkish than previous statements from Fed officials and the FOMC, leading them to reduce the probability of the Fed raising interest rates twice this year to around 33%.

Furthermore, the weakening of the dollar boosted gold prices (XAUUSD) to test the $4,500 per ounce zone again. However, the weakening of the dollar and the rise in gold prices slowed somewhat after the US ISM Services PMI index for August rose to 55.4 points, better than expected. The price index also climbed to 72.6 points, higher than expected. Meanwhile, the Japanese yen weakened slightly, approaching the 156 yen per dollar zone.

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 appreciation of the Thai baht overnight may slow down somewhat, as market players may want to absorb new factors. Furthermore, the continued appreciation of the Japanese yen (JPY) should also slow until the market has factored in additional information. (However, if the Japanese yen clearly breaks through the 155 yen per dollar zone, JPM estimates that this could support further appreciation, testing the 150 yen per dollar zone or lower, as market players adjust their short positions in the JPY.)

Furthermore, we believe that if the US employment report does not come out significantly worse than expected, such as continuing to show negative growth, market participants may not significantly alter their views on the FED's interest rate outlook.

Market participants may want to wait and see the US CPI inflation rate before significantly adjusting their views on the FED's interest rate outlook. Therefore, any appreciation of the Thai baht, if it occurs, may be limited to around 32.80 baht per dollar (next support level at 32.50-32.60 baht per dollar), while the resistance zone for the baht may be around 33.00 baht per dollar (next resistance level at 33.20-33.30 baht per dollar).

While the labor market data report may not have "surprised" the market much, we believe it's advisable to prepare for potential volatility. Historical data over the past year shows the Thai baht (USDTHB) can fluctuate within a range of +/- 0.25% (+/- 1 standard deviation) in the 30 minutes following the release of the US labor market data.

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 32.80-33.00 baht/dollar.

Other market views

The overall sentiment in the US stock market was boosted by a reduction in the likelihood of the Fed raising interest rates, which supported gains in tech and growth stocks, led by Tesla (+5.4%) and Microsoft (+2.7%).

Market participants remained cautious, waiting to monitor the situation in the Middle East and US labor market data. As a result, the Dow Jones Index rose +1.18%, the S&P 500 closed up +1.06%, and the Nasdaq Composite climbed +1.40%.

On the European stock market side, the STOXX 600 index reversed course and rose by +0.49% after market participants gradually eased concerns about the prospect of further interest rate hikes by major central banks, such as the Fed.

However, uncertainty surrounding the situation in the Middle East and the Russia-Ukraine conflict, along with market participants' expectations that the European Central Bank (ECB) may raise interest rates two more times this year, continues to limit the upside of European stock markets. Meanwhile, luxury stocks face additional pressure from concerns about sales outlooks, particularly amidst a less-than-bright outlook for the Chinese economic recovery.

In the bond market , the 10-year US Treasury yield fluctuated but overall edged slightly lower to around 4.76% after market participants lowered their expectations of a Federal Reserve interest rate hike, following statements from FOMC committee member Christopher Waller that were less hawkish than those of previous Fed officials.

The decline in 10-year US Treasury yields has been slowed by increased risk appetite in the US financial markets and better-than-expected US ISM Services PMI data. We believe market participants can gradually accumulate long-term US (and Thai) bonds.

Because current long-term bond yields can absorb the risk if the FED actually proceeds with interest rate hikes, as the market expects (which could be 2-3 times this year), the 10-year US Treasury yield could rise to test the 5.00% zone.

This level is below the break-even yield point (the bond yield level at which holding the bond from the current level will begin to result in losses in terms of overall return) of 10-year US Treasury bonds, which could be as high as 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 gradually weakened, following the strengthening of the Japanese yen and market participants lowering their expectations for a Federal Reserve interest rate hike. However, the dollar's weakening slowed somewhat as market participants awaited further US economic data reports. Furthermore, the situation in the Middle East remained highly uncertain, causing the dollar index (DXY) to fall to the 99.0 point zone (the DXY index fluctuated between 98.8 and 99.3 points).

In terms of gold prices, the weakening of the dollar, along with reduced likelihood of the Fed raising interest rates by market players, supported the price of gold (COMEX gold futures for December 2026 delivery) to rise above the $4,500 per ounce zone once again.

For the next 24 hours

The key highlights will be the U.S. labor market data report, including nonfarm payrolls, the unemployment rate, and wage growth rates for August.

On the European side, market players will be awaiting the eurozone's July retail sales report, along with statements from officials at the European Central Bank (ECB) and the Bank of England (BOE).

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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