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The SET index inched up 0.34% on Friday, to close at 1,549.41, ahead of the speech by Federal Reserve Chair Janet Yellen at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming. For the week, the index gained 0.69%, despite falling crude prices. The
USD/THB exchange rate shot up 0.44% immediately following comments from Stanley Fischer, Vice Chairman of the U.S. Federal Reserve, in an interview with CNBC shortly after Yellen’s speech on Friday. Fischer told a CNBC reporter that the central bank could possibly raise interest rates twice before the end of 2016, depending on the strength of economic data released in the coming months.
Many Fed observers believe that Fischer’s comments overshadowed the earlier remarks from
Yellen, who said, “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”. The FX market interpreted Yellen’s remarks as the odds of an interest rate hike were roughly even for the Fed's December policy meeting.
The probability of a 25 basis point rate hike at the next FOMC meeting on September 21 jumped to 36.0%, while the probability of a no change in monetary policy stands at 64.0%, based on the CME Group 30-day Fed Fund futures prices as of August 26. From the Fed’s “Dot-Plot”, or the FOMC’s participant survey, the Fed Funds target rate is between 0.75 and 1.0%, meaning two more rate hikes are possibly on the table this year.
The Commerce Ministry of Thailand said on Friday that Thai exports contracted for the fourth consecutive month in July, by 4.4% year-on-year, bringing down shipment growth in the first seven months of the year to minus 2.0%. Two weeks ago, the BoT forecasted economic growth of 3.1% this year, with exports contracting 2.5%.
The
USD/THB exchange rate was quoted at 34.66 baht per dollar on Friday, practically unchanged for the week, while the
THB/JPY printed at 2.9383 yen per baht, up 1.56% for the week. The
USD/THB technical resistance is at 34.74 baht per dollar, or 23.6% Fibonacci
retracement, while the THB/JPY technical resistance is at 3.07 yen per
baht.
The Thailand 10-year bond yield inched up 0.48% for the week, to close at 2.11% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.628% on Friday, narrowed to 0.482 percentage points.
The WTI crude spot price tumbled 2.99% for the week, to close on Friday at $47.64 per barrel, while Brent crude dropped 2.24% to close at $49.71 per barrel, despite swirling speculation on Tuesday that Iran may agree to join some OPEC members to potentially freeze production levels at the coming informal OPEC meeting. The speculation came on the heels of reports on Monday about burgeoning Chinese fuel exports and increasing Iraqi and Nigerian crude shipments. Crude prices bounced off the weekly low on Thursday, as traders were speculating that Yellen’s speech on Friday at Jackson Hole would be dovish.
Data on Monday from the General Administration of Customs of China showed that diesel exports rose 181.8% to a record 1.53 million tonnes, almost tripling China's average monthly export volume in 2015. Gasoline shipments were up 145% at 970,000 tonnes, falling slightly from a record 1.10 million tonnes in June. The domestic oil product surplus and rising crude stockpiles could slow down Chinese crude oil imports.
Iraq said on Monday that it will boost crude shipments by about 150,000 barrels per day (bpd) in the coming days following an agreement to resume exports from three oil fields in Kirkuk. The Niger Delta Avengers declared an end to attacks on oil infrastructure in Nigeria and will conduct talks with the government, according to Bloomberg.
The EIA weekly U.S. oil inventory report on Wednesday showed an increase of 2.5 million barrels to 523.6 million barrels, excluding strategic inventories, in the week ending August 19, compared to S&P Global Platts analysts’ expectations for a rise of 200,000 barrels. The American Petroleum Institute (API) inventory data on Tuesday showed a U.S. crude inventory build of 4.64 million barrels for the week.
Separately, the EIA said the weekly U.S. crude oil production decreased by 49,000 bpd for the week ending August 19, 2016, to 8.548 million bpd. Weekly U.S. crude oil output has fallen about 11.05% from the peak level of 9.61 million bpd during the week ending August 19, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count was unchanged at 406, compared to 316, when the rig count hit the low on June 6, 2016.
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