USD/THB Outlook: The outlook for USD/THB is slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows without a clear driver for change.
Key drivers:
• Rate gap: The Federal Reserve is expected to cut interest rates, which may further weaken the US dollar compared to the Bank of Thailand's current low rate policy.
• Risk/commodities: Oil prices are above their average, which could support the THB as higher oil prices generally benefit Thailand’s economy.
• One macro factor: The Thai economy is projected to grow below its potential, indicating ongoing economic challenges that could limit the Baht's strength.
Range: The USD/THB is likely to hold within its recent range as external factors create mixed signals.
What could change it:
• Upside risk: A surprise increase in US labor market strength that could lead to a stronger dollar.
• Downside risk: Escalation of geopolitical tensions impacting market confidence in the USD.
