A series of peaceful protests and reports of no violence following the ousting of former Prime Minister Yingluck Shinawatra, the Thai baht hit the highest point in almost three months. Thai equities also got a boost after speculation that the Federal Reserve could refrain from tapering in January, which emerging markets have been sensitive to the correlation of stimulus reduction.
Kozo Hasegawa, a FX trader at Sumitomo Mitsui Banking Corp., keeps the recent climb in the baht in context. ” “There’s some support from U.S. data side for the baht. Still, political unrest is lingering and the baht is unlikely to gain sharply,” said Hasegawa. The baht did strengthen by .7 percent, reaching 32.714, the most since October 17.
There were still protests in Bangkik after demonstrators reject a government offer to postpone elections scheduled from February 2. ““It seems the market is taking comfort in the fact that the government may give in to some of the demands of the protesters,” said Leslie Tang, senior currency analyst at Malayan Banking Bhd.
The daily chart shows price action trending in a sideways channel, and the baht strengthened pushing the USDTHB down to the lower trend line. A small bounce was provided. The daily has two scenarios: the first, the dollar strengthens if the Federal Reserve announces that they are, indeed, tapering by another $10 billion. The USDTHB will likely retest and attempt to push through 33 baht per dollar.
However, momentum is less than optimal. If the baht continues to strengthen over the short-term, 32.42 will provide key support.
The monthly chart shows price action support corresponding with the daily chart, while the unlikely second scenario is that the baht will strengthen further against the dollar. In this case, additional support will be found at 31.95. The monthly chart shows a potential topside projection is 33 closed above, which is 33.52.