The headline Eurozone’s December CPI on an annual basis declined by 0.2%, missed the ecomomist’s forecast of a 0.1% decrease The December’s core CPI which excludes food and energy prices, fared a litte bit better as the core CPI index printed at 0.8% versus the expectations of 0.7% year-on-year.
The markets is now pricing in a 100% possibility of QE announcement by ECB President Mario Draghi at the next ECB policy meeting on January 22. The market patience is waring thin and no action from Mr. Draghi this time could spelll big trouble to the gobal financial markets.
The Forex traders dumped the euros, sending the euro-dollar exchange rate to an intraday low of 1.1802 dollar per euro. If the exchange rate brake through the 1.18 dollar per euro support level, the next support levels are 1.1764 and 1.1643 dollar per euro. The euro-Thai Baht exchage rate is now at 38.921 baht per euro, meaning the Thai baht appreciates as much as 13.3% in the past 52-week against the euro.
As far as
we understood, the Thai baht is pegged to a weighted basket of the currencies of Thailand's major trading partners. In the past 52-weeks, the dollar-Thai baht and China renminbi-Thai baht exchange rates are very stable, compared to the euro-Thai baht and Japanese Yen-Thai baht exchange rates. This is not a good news if you try to sell something to the EU or Japan.
Hopefully, Thai exporters enter into some type of yen or euro currency contracts to reduce the risk that their cash flows and earnings will be adversely affected by currency exchange rate fluctuations, meaning in plain languge a “currency hedge”.
The Thailand SET index jumped 1.57% on the news and close at 1500.75, just above the 200-day SMA. Technically, the Thaland SET has been moving in a bullish falling wedge pattern in the past 2-3 months. If the 1500 level holds, the next key technical resistances are 1510 and 1520.
The Q4 2015 earnings reports by listed Thai corporates are around the corner. Let’s see how they fare in this tough economic environment. We might see a rising wedge breakout surprise if the earnings look decent. |