- USDTHB : moving in the range 32.97 – 33.10 this morning, USDTHB at current level might be possible long entry. Hawkish Fed may likely continue to drive USDTHB in medium term, supporting level of USDTHB is around 33.00, resistance level is around 33.20, 33.50
- SET Index: 1,669.1 (+0.08%), 3 Feb 2022
- S&P 500 Index: 4,477.4 (-2.47%), 3 Feb 2022
- Thai 10-year government bond yield (interpolated) : 2.11% (-1.00 bps), 3 Feb 2022
- US 10-year treasury yield: 1.82 (+4.00bps), 3 Feb 2022
- Fed's Barkin says rates should move to pre-pandemic levels, then assess next steps
- BoE hikes rates to fight inflation, but not by enough for 4 officials
- Emerging FX already riding higher local rates will outperform this year: Reuters poll
- Dollar set for bruising week after ECB and BOE get more hawkish
Fed's Barkin says rates should move to pre-pandemic levels, then assess next steps
The U.S. Federal Reserve needs to begin raising interest rates but it is too soon to say how far or fast that process will need to go to bring inflation under control, Fed Barkin said Thursday. He said it remained uncertain whether U.S. inflation would dip on its own back towards the Fed's 2% target, or be driven persistently higher by rising wages, higher input costs, and businesses developing more aggressive pricing strategies. "It is a straightforward call to say we ought to get rates back into better position," Barkin said, but with so much unknown, "it does not feel to me like there is enough information to say holy cow we have to restrain the economy right now." His comments were a more tempered view of a situation that has prompted some market analysts to conclude the Fed has lost control of inflation and will be forced to raise interest rates faster and higher than anticipated.
BoE hikes rates to fight inflation, but not by enough for 4 officials
The Bank of England raised interest rates to 0.5% on Thursday and nearly half its policymakers wanted a bigger increase to contain rampant price pressures, which the British central bank warned would push inflation above 7%. In a surprise split decision, four of the nine Monetary Policy Committee members wanted to raise rates to 0.75% in what would have been the biggest increase since 25 years ago. A slim majority, including Governor Andrew Bailey, voted for a 0.25 percentage point increase. The pound briefly jumped above $1.36, its highest level since Jan. 20, and touched a two-year high against the euro before falling back after ECB raised the possibility of a rate hike of its own. British government bonds sold off, with the 10-year yield at its highest since January 2019.
Emerging FX already riding higher local rates will outperform this year: Reuters poll
Emerging market currencies will struggle to stem losses in the near-term as the U.S. Federal Reserve lifts interest rates off the zero bound, but currencies from countries where central banks have already begun raising rates will outperform the rest. A Reuters poll of market strategists suggests there will be no repeat of the mayhem in 2013, when the U.S. Fed's decision to trim bond purchases punished emerging market currencies across the board. More than 70% of respondents said front-loaded rate hiker currencies such as Brazil's real and Russia's rouble will weather the storm better than emerging market currencies did during that episode. But these gains are forecast to be torpedoed in three months by an expected 25 basis point Fed hike in March, likely attracting inflows to the U.S. and keeping the mighty dollar in the driving seat.
Dollar set for bruising week after ECB and BOE get more hawkish
The 10-year government bond yield (interpolated) on the previous trading day was 2.11, -1.00 bps. The benchmark government bond yield (LB31DA) was 2.10, +0.00 bps. LB31DA could be between 2.07-2.12. Meantime, the latest closed US 10-year bond yields was 1.82%, +4.00bps. USDTHB on the previous trading day closed around 33.14 Moving in a range from 32.97-33.10 this morning. USDTHB could be closed between 32.95-33.05 today. Meantime, The dollar index was heading for its worst week in nearly two years on Friday as the euro held firm at a three-week high and sterling gained after hawkish shifts from the European Central Bank and the Bank of England.
Sources : ttb analytics , Bloomberg, CNBC, Investing, CEIC
