The current market bias for the USD to THB exchange rate is bearish.
Key drivers include:
- The interest rate differential favoring the USD as the Federal Reserve maintains higher rates compared to the Bank of Thailand's recent cut to 1.25%.
- Ongoing economic challenges in Thailand may dampen demand for the baht, despite forecasts of modest appreciation supported by capital inflows.
- Recent US labor data shows falling unemployment, which has slightly strengthened USD expectations.
The expected near-term trading range suggests continued pressure on the USD, likely trading below recent highs. Upside risks could come from surprising economic growth in the US, while downside risks may arise from intensified geopolitical tensions or unexpected dovish signals from the Federal Reserve.
With USD currently at 31.47, this reflects a notable decline from the 3-month average of 32, as the baht strengthens amid a backdrop of a stabilizing oil market, with oil prices recently trending higher.