Thai baht strong, US dollar weak, gold rebounds

Krung Thai Bank currency analyst Poon Panichpibul said the baht opened this morning stronger than the previous day’s close of 37.11 baht per US dollar, gradually strengthening overnight supported by the dollar’s depreciation due to the bond yield’s decrease. At the same time, the weakening of both the dollar and the 10-year bond yield also supported the continuous adjustment of gold prices. Poon expects the flow of gold trading activities will also help the baht to strengthen.

Although the Israeli-Hamas conflict might create volatility in the financial market, the US stock market received strong support from the rising stocks of arms manufacturers such as Lockheed Martin (+8.9%). Additionally, concerns about the impact on crude oil supplies due to the conflict also pushed energy stocks higher, boosting the S&P500 index by +0.63%.

However, it is not yet clear whether the baht can continue to strengthen. Although the momentum on the strong side has returned due to the US dollar's depreciation and the rebound in gold prices amidst the conflict, it is still necessary to be cautious. If the conflict intensifies, it might push crude oil prices into the US$100 per barrel zone, with gold potentially reaching U$1,880 per ounce. This continuous upward adjustment of gold prices might encourage profit-taking, and the flow of transactions might also help the baht to strengthen.

Today, investors are still closely monitoring the Israeli-Hamas conflict and looking at whether the conflict will escalate further and impact both the Middle East and the global economy.

Additionally, the market is waiting for statements from both the Federal Reserve and the European Central Bank (ECB), as some officials have recently indicated that the interest rate hike is nearing an end. This might help ease concerns about the major central banks' prolonged tight monetary policy.