USD/THB Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and positioned near recent lows.
Key drivers:
• Rate gap: The Federal Reserve is expected to cut interest rates, while the Bank of Thailand recently reduced its rate to stimulate growth, widening the gap between the two currencies.
• Risk/commodities: With oil prices significantly above average, this could pressure the Thai Baht, which is sensitive to energy costs due to Thailand's import needs.
• One macro factor: Thailand's projected economic growth remains low at around 1.6%, indicating ongoing challenges that could dampen the Baht's strength.
Range: USD/THB is likely to drift within its recent range as both currencies grapple with their respective economic issues.
What could change it:
• Upside risk: Any surprising positive data from the US may bolster the USD and drive the rate higher.
• Downside risk: Continued weakness in the US economy or further aggressive easing from the Fed could weaken the USD against the baht.
