USD/THB gains some ground as markets digest BoT decision

The USD/THB is currently trading at 35.60, reflecting a gain of 0.15 for Wednesday's session.
The BoT held rates steady as expected, at 2.5%.
Monetary policy diverges may favor the Fed in the short term.

Patricio Martín FXStreet

In Wednesday's session, the USD/THB was seen up 0.15% at 35.60 after touching a low at 35.45. Considering both the Federal Reserve (Fed) and Bank of Thailand’s stances, the former’s approach which seems to point to delaying cuts limits the downside potential for the pair, as the latest movements could be seen as buyers taking a breather after last week’s rally.

In line with that, the March cut odds from the Fed have fallen below 25% from being fully priced in earlier but it will all come down to the incoming data with January's inflation figures the next highlight for the markets. Meanwhile, the Bank of Thailand (BoT) held rates steady at 2.5%, despite government pressure for cuts. However, the 7-2 dovish hold vote with two members favoring a cut suggests the BoT could start an easing cycle anytime, with the swaps market pricing in a 25 bp easing over the next three months. In that sense, as long as the markets push back rate cuts by the Fed and embrace a dovish BoT, the pair may continue advancing.

USD/THB technical analysis

Indicators on the daily chart suggest a neutral to bullish outlook as indicators seem to have flattened within positive territory. As it stands, the Relative Strength Index (RSI) is neutral above 50 while the Moving Average Convergence Divergence (MACD) echoes this sentiment, showing flat red bars that suggest a neutral tone. As for the Simple Moving Averages (SMAs), the pair is keeping above the 20-day and 200-day SMAs - a bullish signal. However, it's trading below the 100-day SMA, signaling a slight hint of caution for the uptrend. It's worth noticing that the pair increased by 1.30% last week so these movements could be seen as a technical correction as buyers consolidate gains.

USD/THB daily chart

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD posts modest gains above 1.1650 amid weaker US Dollar

EUR/USD posts modest gains above 1.1650 in the European session on Monday. The prospect of a US Federal Reserve rate cut at its December meeting on Wednesday keeps the US Dollar undermined across the board, supporting the pair amid strong German Industrial Production data. Eurozone Sentix Investor Confidence data is next in focus.

GBP/USD consolidates above 1.3300 as traders await Fed rate decision

GBP/USD kicks off the new week on a subdued note and oscillates in a narrow trading band above 1.3300 in European trading on Monday. The pair, however, remains close to the highest level since October 22, with bulls awaiting a sustained strength on a potential dovish Fed verdict due later this Wednesday.

Gold holds firm above $4,200; awaits Fed rate decision on Wednesday before the next leg up

Gold sticks to its modest intraday gains through the early European session, though it lacks bullish conviction and remains confined in a one-week-old trading range. The growing acceptance that the US Federal Reserve will lower borrowing costs again this week keeps the US Dollar depressed near a one-month low and acts as a tailwind for the non-yielding yellow metal.

Bitcoin and Ethereum aim for breakouts as Ripple holds at $2

Bitcoin, Ethereum, and Ripple record a minor recovery on Monday, starting the week on a positive note. The retail demand for major cryptocurrencies remains strong despite outflows from Bitcoin and Ethereum Exchange Traded Funds.

The Silver disconnection is real

Silver just hit a new all-time high. Neither did gold, nor mining stocks. They all reversed on an intraday basis, but silver’s move to new highs makes it still bullish overall, while the almost complete reversals in gold and miners make the latter technically bearish.