HomeNewsUSD/THB on Track for One of Best Days in 2022
USD/THB on Track for One of Best Days in 2022

USD/THB on Track for One of Best Days in 2022

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The USD/THB exchange rate is on course to finish today’s session with one of the biggest one-day advances since the beginning of the year.

At the time of writing, the US dollar is up 1.00 percent against the Thai baht to 36.03. Should the rater finish the day here, it will be the sixth time in 2022 the baht has lost a full percentage point against the greenback.

The dollar strength comes off the back of last week’s data-heavy schedule. FOMC minutes released on Thursday revealed that Fed members will likely maintain their current hawkish stance. In particular, Jim Bullard, president of the St. Louis Fed, told reporters that he is leaning toward supporting a 75bp increase at the next meeting.

On the same day, initial jobless claims came in at 250k, which was lower than the forecast 265k and below the previous month’s 252k. While the August Philadelphia Fed Manufacturing Index of 6.2 was significantly higher than expected.

The data helped the dollar finish the week stronger against the baht. And if today is anything to go by, this week could be the same.

Dollar to Thai Baht Exchange Rate

The Thai currency has depreciated by more than 8 percent against dollar this year. Although the weaker baht encouragers exports and individuals who send money to Thailand, it’s stoking rising energy inflation, which will drag on consumer spending.

As a result, the Bank of Thailand (BOT) was forced to hike interest rates by 25 basis points to 0.75 percent at the latest policy meeting. Despite the first rate hike of the year, the baht has slid lower in the last two weeks. Indeed, there are indications that the USD/THB pair may be heading even higher still.

USD/THB Outlook

The daily chart shows USD/THB has today climbed above the 50-Day Moving Average (DMA). If the pair closes the day above the indicator at 35.81 (green line), we should expect follow-through buying.

Technical traders use DMA’s to gauge market momentum. Taking this into account, ending the day here could set the dollar up for a run towards the 2022 high of 36.94.

The outlook is positive as long as USD/THB is above the 50-DMA. Therefore a close below 35.81, flips the near-term outlook to bearish.

USD/THB Price Chart

Elliot Laybourne
Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others. Today, he splits his time between Thailand and Dubai, from where he provides trading consultancy and business development services for family office and brokerage clientele.