Baht weakens to 35.71/dollar as US announces better job figures

The stronger-than-expected US employment rate prompted expectations that the US Federal Reserve would not rush to reduce its policy interest rate, explained Krungthai Bank forex analyst Poon Panichpibool.

The US unemployment rate fell from 3.9% to 3.7% in November with total nonfarm payroll employment rising by 199,000.

Dollar appreciation was also attributed to weakening of the yen after concern abated that Japan’s central bank would tighten fiscal policies during its meeting this month.

The baht was also pushed down by the steady rise in US 10-year bond yields, which reached a height of 5% on October 23, Poon said. He added that the baht could fall further after the Fed, Bank of England and European Central Bank (ECB) announce new key economic figures this week.

He expects the Fed to maintain its policy rate at 5.25-5.50% amid slowing US inflation, and the ECB to retain its policy rate at 4% and deposit facility rate at 5.25%.

Poon cautioned the baht could test its resistance level of 36 per US dollar soon.