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The SET closed up 1.93% for the week at 1,412.67 on Friday, as the Thai baht weakened against the U.S. dollar. The
USD/THB exchange rate was quoted at 35.723 baht per dollar on Friday, up 5 pips (1 pip = 0.01
baht) for the week, while the THB/JPY was printed at 3.0863 yen per
baht, down slightly from the last Friday close. The Thailand 10-year bond yield inched lower 0.47% for the week at 2.11% on Friday, still down 16.27% year-to-date. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.851% on Friday, is 0.259 percentage points.
The U.S. dollar index, a weighted index of the value of the U.S. dollar relative to a basket of six major currencies, inched up 0.22% for the week to close on Friday at 95.5 after St. Louis Fed President James Bullard, a voting member of the
FOMC, told CNBC on Tuesday that a U.S. Federal Reserve rate hike in June or July wasn't set in stone, but labor data suggested it was time to pull the trigger.
Federal Reserve Chair Janet Yellen continued to be vague about almost everything, as she told the audience at an event at Harvard University on Friday that an interest rate hike may coming in a matter of “months,” as she expected the economy, and importantly, the jobs market, to continue to get better.
It looks like the PBoC takes things more seriously than their U.S. counterparts. Ahead of Yellen's "big event" at Harvard University on Friday, the China Foreign Exchange Trade System
(CFETS), a sub-institution of the PBoC, set the reference rate slightly firmer at 6.5490 yuan per dollar, on Friday in Shanghai. The Chinese corporates have been buying the U.S. dollar in anticipation of a June rate hike, while the PBoC is depreciating the renminbi to avoid panic buying.
According to an unconfirmed report by Bloomberg, Chinese officials plan to ask the Fed at the U.S.-China Strategic & Economic Dialogue meeting on June 6-7 in Washington D.C. about the timing of a Federal Reserve interest-rate hike to avert any surprises.
The Commerce Ministry of Thailand said on Wednesday that April exports fell 8% on a year-on-year basis, missing the Reuters consensus forecast of a 1.25% decline. Imports also plunged 14.92% in April from a year earlier, far worse than the 7.65% decline in a Reuters poll. Thailand’s trade surplus shrunk to $721 million in April. The Bank of Thailand said on Thursday that the April trade figure is still in line with the central bank's view that exports will fall 2% this year.
The WTI crude oil spot price ran up another 2.23% for the week to close at $49.56 per barrel on Friday, following bullish weekly crude oil inventory reports. Speculators pushed the spot price over the $50 level to an intraday high of $50.12 per barrel on Thursday, for the first time since July 2015.
The Energy Information Administration (EIA) weekly U.S. oil inventory report on Wednesday showed a draw of 4.2 million barrels to 537.1 million barrels in the week ending May 20, compared to analysts’ expectations for a drawdown of 2.5 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed U.S. crude inventories declined by 5.1 million barrels.
The EIA also said the weekly U.S. crude oil production fell again for the seventeenth consecutive week, to 8.767 million barrels per day (bpd) for the week ending May 20, 2016, the lowest level since September 5, 2014, at 8.59 million bpd. Weekly U.S. crude oil output has fallen 8.77% from the peak level of 9.61 million bpd during the week ending June 6, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count declined 2 from last Friday at 316, an 80.36% drop from the peak number of 1,609 in October 2014.
From our technical viewpoint, the SET bounced off the 1,369 level and is back above the 50-day SMA, as the bond market sell-off last week was temporary. The index is bumping into the 1,412.50 resistance level, which, if broken, will take the index up to retest the 1,430 resistance levels. A bullish golden cross, or the 50-day and 200-day SMA crossover, remains intact and a reverse head and shoulders chart pattern has now emerged. It looks like the bulls were in full control of the market this week. |
