Foreign Currency Update.

Foreign Currency Update.

The US Dollar vs. the Thai Baht exchange rate has moderated very slightly from 35.2 to dip below the 35 mark at 34.92. This is in spite of the fact that the US dollar lost more ground than this to other major currencies as a result of the Federal Reserve comments that will see a more gradual rate of interest rate rises in the US compared to some estimates. The Dollar index, which was higher for some weeks, still managed to cling on to the 100 mark and looks set to maintain its recent range. Further weakness is not expected since the Federal Reserve already gave its best-case scenario of three rate increases expected this year vs. the four that was becoming more widely expected.

The British pound was under pressure as Brexit votes in the UK parliament were underway, but from an oversold level of 1.213 to the US Dollar it managed to stage a rally towards 1.2380. That brought the Pound versus the Thai baht from 42.8 at its lows to 43.2. There are hints that that there could be further appreciations as a potential short squeeze gets underway. However outlook is uncertain since there are a number of hurdles in the early Brexit negotiations that could dent any emerging rally in the Pound.

For much of the previous period the Japanese Yen was trading at above 114 to the USD based on expected hawkish comments from the US Federal reserve. However as the US Dollar weakened on news of a more gradual rate rise outlook, the Yen strengthened to below 113 to the USD and trades in the range 112.40 to 113.20. The most recent low of 111.59 has yet to be broken and it seems unlikely that it will be given that there is no more bearish news for the greenback in sight. However if there is a move below 111.59 then the next level to watch could be the 108 mark. Against the Thai baht the Yen remains in the 0.3 to 0.315 area.

The Russian Rouble has seen moderate strengthening from recent levels of 59 to the US Dollar towards 57.5. Moves have been more muted of late as the Trump administration seems to be slow to move on the Russian agenda, yet continued expectation of warmer ties between the US and Russia have helped to support the Rouble. Against the Thai Baht the Rouble has managed to climb to above 0.60 baht and is expected to hover around the 0.60 mark going forward.

The Euro dipped to 1.052 to the Dollar but with recent Dollar weakness has seen a strong rebound to the 1.0750 mark with many central bankers calling for a low in the Euro at the previous levels. As such there could be a move to higher levels if the rally continues. Against the Thai Baht the Euro has moved from 36.75 to 37.65, a gain of more than 2 per cent.