Mr. Poon Panitpipat, a market strategist at Krungthai GLOBAL MARKETS, Krung Thai Bank, revealed that the latest U.S. economic data, including the Conference Board Consumer Confidence Index and JOLTs Job Openings, came in better than expected. This has raised concerns among U.S. financial market players about the Federal Reserve potentially accelerating interest rate hikes and continuing to sell off risky assets, particularly those sensitive to rising interest rates/bond yields, such as tech stocks and growth stocks (Tesla -2.5%, Apple -1.5%). Additionally, the U.S. stock market faced further pressure from a significant drop in energy stocks (Exxon Mobil -3.8%, Chevron -2.4%) after crude oil prices plummeted due to concerns over a slowdown in major economies if central banks accelerate interest rate hikes to control inflation, as well as worries about the potential return of oil production and exports from Iran and Venezuela. Consequently, the Nasdaq tech index fell by -1.12%, while the S&P 500 closed down -1.10%.


Mr. Poon Panitpipat
Market Strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank

In Europe, the STOXX 600 index continued to decline by over -0.67% amid pressures from a significant economic slowdown and the risk of entering a recession, which has impacted energy stock prices (TotalEnergies -3.6%). Moreover, European stock markets faced additional pressure from a continued decline in tech stocks (ASML -2.6%) as inflation rates in major European economies, such as Germany and Spain, remain high, leading market players to worry that the European Central Bank (ECB) may need to raise interest rates by about 0.75% in the September meeting to tackle inflation.

In the currency market, the dollar has strengthened against major currencies, with the DXY Index rising close to 108.75 points, supported by better-than-expected U.S. economic data, raising concerns that the Fed may need to accelerate interest rate hikes. Additionally, the dollar has gained support from safe-haven demand as financial markets are in a risk-off mode. However, the dollar's strength has been tempered by the euro rising above 1.00 dollar as market players assess that the ECB may proceed with aggressive interest rate hikes. Despite the risk-off sentiment, the Fed's potential interest rate hikes and the dollar's strength continue to pressure gold prices down to $1,735 per ounce, which may be a support zone where some players might start buying gold on dips.

Today, the market will be watching China's economic outlook through the release of the Official Manufacturing & Non-Manufacturing PMIs for August. The market expects that various issues affecting China's economic recovery, such as real estate debt problems, severe drought, and COVID-19 outbreaks, will pressure the industrial manufacturing sector, reflected in the manufacturing PMI for August potentially dropping to 48.6 points. Meanwhile, the services sector may expand at a slower rate due to COVID-19 outbreaks occurring in several tourist cities, with the services PMI possibly decreasing to 52.6 points.

In Europe, the market anticipates that the overall CPI inflation in the Eurozone may continue to rise to 9.0% in August, which could prompt the ECB to accelerate interest rate hikes in September.

In the U.S., the market will be monitoring labor market trends through the ADP private sector employment report, which often aligns with the Nonfarm Payrolls data to be released this Friday. If the ADP private sector employment figure exceeds the market's expectation of 200,000 significantly, it may further bolster market confidence in the Fed's interest rate hikes, given the still-strong labor market.

In addition to the economic data reports, the market will be keeping an eye on statements from Fed officials to assess their views on the U.S. economic outlook and the direction of Fed monetary policy.

Regarding the outlook for the Thai Baht, we see that the Baht will continue to fluctuate within a wide range and may face risks of weakening if the dollar continues to strengthen. However, we believe the Baht may not weaken beyond the significant resistance level around 36.50 Baht per dollar (notably, if the Baht weakens beyond this zone, the next resistance will be around 36.75 Baht per dollar) as exporters may wait to sell dollars in this resistance zone. Furthermore, the risk-off sentiment in the U.S. and European stock markets does not seem to pressure foreign investors to sell Thai stocks aggressively; on the contrary, we still see net buying of Thai stocks during dips.

However, caution is advised regarding the Baht's volatility today due to several important economic data reports, starting with the Chinese economic data. If it comes out significantly worse than expected, it could pressure EM Asia assets or cause EM Asia currencies to weaken alongside the Chinese yuan. During the Eurozone inflation data release, the Baht may also fluctuate with the dollar, which may face pressure from the euro if market players start to gain confidence in the ECB's interest rate hike outlook.

In times of high financial market volatility and numerous uncertainties, particularly regarding Fed monetary policy trends, we recommend that businesses employ a more diverse range of foreign exchange risk hedging strategies, especially using options, which can enhance risk management effectiveness during periods of heavy market volatility.

Today's Baht is expected to be in the range of 36.30-36.55 Baht per dollar.