Baht Outlook Bleak; USDTHB Spec. Trade

by on November 8, 2013 5:07 am GMT

Political unrest in Thailand is creating a bleak outlook in the Thai baht as it is becoming Asia’s worst preforming currency this quarter. It is more than likely losses will continue and will bode well for the USDTHB.

A new amnesty law for political offenses is sparking outrage by the Thai people, and overseas investors are beginning to worry. Over $1 billion have been withdrawn from Thai assets since the law has been proposed. Moreover, Thailand has a current-account deficit and less than optimal growth, which is becoming common ground in a few Asian countries.

Australia & New Zealand Banking Group, the most accurate baht forecaster, is looking for a 2.1 percent decline in the baht to 32 baht per dollar. “Those are reasons enough for the baht to weaken and political uncertainty at the moment is another additional headwind,” the banking institution said.

Technically, upside for the USDTHB is looking promising. Typically, these exotic crosses are more volatile and better used for position trading. However, the 4H technicals are showing a nice opportunity to short the baht.

The price action has closed and moved beyond the 61.8 percent Fib. retracement as it heads towards the 31.47 high. The ADX is showing a strong trend at 33 with a large gap in +/-DMI. Additionally, the 20 EMA has crossed the 200 EMA which suggest additional support.

Currently trading at 31.29, price action is hitting resistance at 31.30, but a move beyond this should give this pair enough momentum to hit the first target of 31.347 on its way to retest the high of 31.47.

4H Chart of USDTHB

4H Chart of USDTHB