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The SET index bounced off the 1,412 support level on Monday, as the
USD/THB currency pair pulled back from the 34.95 baht resistance level. The
USD/THB climbed as high as 34.978 baht per dollar on Wednesday, prior to the Bank of Thailand’s
(BOT) announcement to hold the benchmark interest rate unchanged at 1.50%. The BOT also said it revised the 2016 economic growth forecast to 3.2%, from 3.1% previously, while maintaining its 2016 export forecast at -2.5%. According to the SET market data, foreign investors stepped in and pushed the index higher to close on Friday at 1,479.07, up 2.34% for the week.
The USD/THB was quoted at 34.93 baht per dollar at the close on Friday, up 0.23% for the week, while the
THB/JPY currency pair inched lower 0.37% for the week to close at 2.9282 yen per
baht. The USD/THB has been trading in a narrow range between 34.80 and 34.95 baht per dollar since Monday, after breaking out the technical resistance at 34.74 baht per dollar, or 23.6% Fibonacci
retracement, last week.
Technically, the SET index just closed above the key technical resistance at 1,478.40, or 23.6% Fibonacci
retracement, and the next resistance or breakout level is 1,491. Although the SET doesn’t directly correlate with the
USD/THB, the index has been moving in the opposite direction of the currency pair since 2015, meaning the SET could pull back sharply if the
USD/THB technical resistance level at 35 baht per dollar can’t hold. According to a Bloomberg survey, the baht is expected to weaken to 35.4 baht per dollar by year-end, meaning one could see the year-end target for the SET index to be between 1,380 and 1,400.
The yield of Thailand 10-year government bond surged 3.65% for the week, to close at 2.27% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.694% on Friday, widened to 0.576 percentage points.
Shares of PTT PCL (SET:PTT) and PTT Exploration and Production PCL (SET:PTTEP), underperformed compared to the SET index, up just 0.31% and down 0.63%, respectively for the week, since crude prices tumbled. The WTI crude spot price nosedived 4.93% for the week, to close on Friday at $43.62 per barrel, while the Brent crude spot price sank 3.95% to close at $45.99 per barrel, after both the International Energy Agency (IEA) and OPEC revised their forecasts on Tuesday that signaled the global crude glut could extend into 2017 on weaker demand.
More selling pressures came from the rise in the U.S. dollar on Fed rate hike fears, as the U.S. dollar index jumped 0.84% this week, and a Reuters report on Friday that Iran's August crude oil exports jumped 15% from July, to more than 2 million barrels per day (bpd), the highest level since 2012.
The EIA weekly U.S. oil inventory report on Wednesday showed a decrease of 600,000 barrels to 510.8 million barrels, excluding the Strategic Petroleum Reserve, in the week ending September 9, compared to S&P Global Platts analysts’ expectations for a rise of 3.3 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed a U.S. crude inventory increase of 1.4 million barrels.
Separately, the EIA said the weekly U.S. crude oil production increased by 34,000 bpd for the week ending September 9, 2016, to 8.493 million bpd. Weekly U.S. crude oil output has fallen about 11.62% from the peak level of 9.61 million bpd during the week ending June 5, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count rose by 2 to 416, compared to 316, when the rig count hit the low on June 6, 2016.
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