The Global Markets team at Krungsri Bank (Ayudhya Bank Public Company Limited) views the direction of the Thai baht this week as likely to move within the range of 30.10-30.40 per dollar, compared to last week's closing level of 30.18 per dollar, which is the strongest level since May 31, 2013. Foreign investors have net bought 4.3 billion baht in the Thai stock market and 3.3 billion baht in bonds, respectively. Meanwhile, the dollar has strengthened against most major currencies, and U.S. bond yields have risen. The euro continues to face pressure as Eurozone economic data indicates a deteriorating trend.

           The Global Markets team at Krungsri believes that the global market will closely watch the U.S. Federal Reserve meeting on October 29-30, where a 0.25% interest rate cut is expected to be the third of this year. Investors will look for signals from the Fed to assess future policy. If the Fed expresses less concern about economic risks than expected, the downward trend of the dollar may be limited. The U.S. will also announce its third-quarter GDP figures and employment data this week, along with updates on trade negotiations following reports that U.S. and Chinese trade officials are close to finalizing a preliminary agreement. Additionally, the market will pay attention to the Bank of Japan (BOJ) meeting and the UK Parliament's decision regarding Prime Minister Johnson's proposal for a new election, after the European Union (EU) decided to extend the Brexit deadline from October 31 without setting a new date.

           Domestically, the market is expected to be more cautious regarding the authorities' stance after the baht tests its strongest level in over six years. Previously, the Governor of the Bank of Thailand indicated that emerging markets face risks from exchange rate volatility amid prolonged low interest rate policies in developed countries. Central banks in emerging markets must follow developed countries in delaying the normalization of monetary policy, which could impact the stability of the financial system. This stance supports our view that the Monetary Policy Committee (MPC) will decide to cut the interest rate by 0.25% to 1.25% at the meeting on November 6 and maintain it throughout 2020. Regarding the U.S. announcement to cut the Generalized System of Preferences (GSP), it is expected to have a limited impact on exports but will exacerbate the negative pressures on the export sector from the slowdown in global trade and the baht's appreciation against competing currencies.

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