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The SET closed at 1,423.42, up 0.76% on Wednesday after the Bank of Thailand
(BOT) decided to key keep rates on hold at 1.5%, after its Monetary Policy Committee Meeting. BOT Governor Veerathai Santiprabhob said last month that monetary policy will play a supportive role, but government spending and investment will drive the recovery and the economy should start to see the full benefit of state stimulus next year. The BOT said it will include its assessment of stimulus spending when it announces revised economic forecasts at the next rate meeting in December.
In its October policy statement, the BOT affirmed its stance as sufficiently accommodative, especially if the THB generally remains weak. Since the last BOT meeting on October 2, the Thai baht has appreciated over 2.66% against the U.S. dollar, to close at 35.529 baht per dollar on Wednesday. Societe Generale's FX Quant Fund, which runs systematic currency strategies by SocGen's quant analysts, has increased their allocation to Asian carry trades. including the
baht, meaning the Thai baht goes higher.
Since the beginning of November, individual investors of the SET have been selling into the rally again. According to SET market data, net sells of individuals are topping 2.25 billion baht while foreign investors, proprietary traders and institutional investors have been buying with combined net buys of 2.25 billion
baht. During the same period, the SET has been up 2.04%. From the chart, 1,401 to 1,417.29 represents the overhead supply level at which individual investors who were trapped in the downtrend market just want to sell at the first opportunity to break even.
Federal Reserve Chair Janet Yellen told the U.S. Congress on Wednesday that a rate hike in December was a "live" possibility, but not a certainty. Ms. Yellen sounded somewhat less hawkish than the Fed's policy statement issued after the FOMC meeting on October 28. The federal funds futures, traded on the Chicago Mercantile Exchange and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate 39.9% odds for a quarter-point rate hike at the December meeting, according to data from the CME Group as of November 4. The odds were down 7.8 percentage points from the previous day's probability of 47.7%, meaning there is now less likelihood for rate hike.
Separately, the ADP report, which is based on data from businesses in the U.S. with almost 24 million workers on their combined payrolls, came out on Wednesday saying that private companies added 182,000 jobs in October, beating the median projection of economists by a tad. The U.S. nonfarm payrolls report for October will be released by the Labor Department on Friday. Wall Street economists' expectations are for a 180,000 gain in payrolls with the unemployment rate remaining at 5.1%.
From our short-term technical viewpoint, the SET has been moving in an ascending (ASC) wedge chart pattern since the end of August and just broke out the 100-day SMA (blue line) head resistance. The inverted hammer candlestick and bullish trend reversal were confirmed. The SET bounced off the trendline support in a bullish higher low (H-L) chart pattern, meaning every low is higher than the previous low while every high is higher than the previous high.
Note that the 50-day SMA (green line) is now running into the trendline support, while the 100-day SMA is the trendline resistance. This suggests that more firms and individual traders use algorithmic trading strategies as tools for making transaction decisions. |
