Forex

Gold prices rebounded today after weak employment figures eased investors' concerns about interest rate hikes by the US Federal Reserve. As of 9:37 pm Thailand time, spot gold rose 0.43 dollars, or 0.01%, to 4,140.10 dollars per ounce, while COMEX December gold futures gained 7.00 dollars, or 0.17%, to 4,169.30 dollars per ounce. Investors increased their bets that the Fed will hold rates steady at its October meeting after the US Labor Department reported that nonfarm payrolls rose by only 29,000 in September, below analysts' forecast of 89,000, while the unemployment rate rose to 4.2%, against expectations that it would remain steady at 4.1%. The latest CME Group FedWatch Tool indicates that investors now assign a 78.4% probability to the Fed holding rates at 3.75-4.00% in October, up from just 29.1% a week earlier, and a 21.6% probability to a 0.25% rate hike to 4.00-4.25%, down from as much as 70.9% previously. However, gold's gains were capped by a stronger dollar, while investors await the minutes of the Fed's September monetary policy meeting, due for release on Wednesday.

Silver price rose 2.3% to near $61.80 during Monday's European session as traders scaled back hawkish Federal Reserve expectations following soft September US labor data. The economy created just 29K jobs in September, below the 90K estimate and a prior reading revised down to 133K from 162K, while the Unemployment Rate climbed to 4.2% against expectations it would hold at 4.1%. According to the CME FedWatch tool, the odds of a Fed rate hike at this month's policy meeting have fallen to 19.4% from 70.9% a week ago. Deutsche Bank analysts, however, see the broader labor market as broadly stable and expect two further 25 basis point Fed hikes over the next couple of quarters. The US Dollar Index rose 0.3% to near 102.20 and touched a fresh annual high near 102.53, supported by safe-haven demand tied to heightened French fiscal risks. On the technical side, XAG/USD trades at $61.69 below its 20-day exponential moving average at $63.24, with the Relative Strength Index at 43.89, while $30 is the immediate support zone and the August 3 low sits at $56.57.

Rabobank lowered its EUR/GBP forecasts across the board, with Senior FX Strategist Jane Foley now seeing the pair around 0.85 over a 3-month horizon. Foley said France's political and fiscal issues are arguably in a more difficult position currently than those of the UK, which has allowed EUR/GBP to push lower ahead of the October 28 UK budget and should cap upside potential for the currency pair. She noted that UK budget concerns are already priced into the British Pound, leaving GBP less vulnerable to a sell-off versus the Euro than it would be otherwise, and said Chancellor Healey faces a difficult task on October 28. Rabobank expects EUR/GBP to trade in a choppy range around current levels on a 1 to 3 month view, with pullbacks likely to offer the Euro some reprieve from current selling pressure, though the single currency is expected to remain on the back foot for now.

Bundesbank President Joachim Nagel, a member of the European Central Bank's Governing Council, said on the 5th that while inflation in the euro zone is high and upside risks dominate, the surge in energy prices has not yet fed through to wages and other prices. Speaking at a precious metals conference in Sorrento, Italy, Nagel noted that "at present, there are no clear signs that inflation is spilling over into price and wage setting," and said longer-term market-based expectations and expert forecasts remain consistent with the Eurosystem's 2% inflation target. At the same time, he warned that price pressures are likely to remain strong even excluding volatile food and energy prices, and said gas prices are particularly vulnerable because storage levels are low, meaning Europe may need to buy larger volumes during the winter. He added that the loss of refining capacity has sharply pushed up prices of refined oil products, while drought, wildfires and fertilizer shortages also pose risks to food prices. Markets expect the ECB to raise the deposit rate by another two to three times over the next year, but Nagel stopped short of endorsing market expectations, saying only that the ECB needs to remain flexible and base its decisions on incoming data.

XSpring Asset Management, or XSpring AM, has upgraded its view on Thai equities to Neutral, setting a target for the SET Index of 1,650 points this year and 1,700 points next year. Chief Executive Officer Yossakorn Follett said global markets still face high volatility from geopolitical risks, particularly the conflict in the Middle East between the United States, Israel and Iran, which has pushed energy and commodity prices higher and created inflationary pressure, forcing the European Central Bank, the US Federal Reserve and the Reserve Bank of Australia to raise policy interest rates. Total assets under management, or AUM, this year is expected to reach 16 billion baht, growing by about 6 billion baht, or 60%, compared with total AUM of about 10 billion baht last year, driven by expansion of the institutional and high-net-worth client base and by building on collaboration with parent company XSpring Capital, or XPG. At the same time, XSpring AM is preparing to launch the XSpring Australia Equity Fund, or X-AUSEQ, a feeder fund that invests directly in the master fund Candriam Equities L Australia Class I Cap, with a policy of investing no less than 80% of the fund's asset value. It is the first fund in Thailand with a policy of investing in companies listed in Australia, on the view that the Australian economy has high structural stability given a record of nearly 30 years of continuous growth without entering recession.

The Indonesian Rupiah is under pressure against the US Dollar, with USD/IDR trading around 17,950 during early European hours on Monday ahead of key domestic economic releases. The pair is advancing as markets await September foreign exchange reserves and August retail sales figures, while Indonesia's external position remains fragile despite an August trade surplus, as elevated import demand and rising energy costs weigh on its balance of payments. Safe-haven demand for the US Dollar has been driven by sharply deteriorating geopolitical conditions in the Middle East, after Saudi-backed forces in Yemen launched a major offensive to reclaim territory from Houthi forces and the Iran-aligned group seized control of the Bab el-Mandeb strait, a critical maritime chokepoint between the Red Sea and the Gulf of Aden that serves as a vital bypass route for regional crude exports avoiding the Strait of Hormuz. Shifting US monetary policy expectations are also shaping sentiment, with the CME FedWatch Tool showing markets now price in nearly an 82% chance the Federal Reserve will hold benchmark rates steady at its upcoming meeting, up from 74% before the labor report. Analysts at MUFG/BTMU said the September US nonfarm payrolls report weakened the case for an October Fed hike, noting payrolls rose by 29k, below the 90k consensus and down from a downwardly revised 133k in August, while the unemployment rate edged up to 4.2% from 4.1% as labor-force growth outpaced employment gains.

Kiwibank said on October 5 that a stronger-than-expected US economy is creating upward pressure on New Zealand mortgage rates, as rising US government bond yields have pushed up swap rates in New Zealand's financial markets, a key reference rate for fixed mortgage rates. In its weekly economic analysis report, Kiwibank said the strength of the US economy may lead financial markets to absorb expectations of higher interest rates, amid forecasts that rates will stay elevated for longer. As a small economy, New Zealand's funding costs are influenced by overseas developments, and financial market interest rates tend to move in the same direction globally, especially long-term rates. Kiwibank also noted that US interest rates have surged to a 25-year high, and the spread between New Zealand's 2-year and 10-year government bond yields has widened from 100 basis points in May to 120 basis points. Meanwhile, the New Zealand dollar's decline below 56 US cents could benefit the New Zealand economy by supporting the export sector and making investment and purchases of goods and services in New Zealand cheaper for foreigners.

Asadej Kongsiri, director and manager of the Stock Exchange of Thailand, disclosed that the foreign capital currently flowing out of the exchange is a temporary move to avoid risk and is in line with other countries in the region, pressured by rising US government bond yields together with domestic factors concerning energy, the flood situation, and concerns over non-performing loans. However, the overall fundamentals of the Thai economy have not changed, so once the flood situation eases and the numbers become clearer, capital has a chance to flow back in. As for the impact on listed companies, most of the affected companies are not listed on the exchange, and analysts have not shown much concern, assessing that overall exports can still grow. As for confidence among operators in the automotive industrial group that have invested in the country, they will continue to invest in Thailand for the long term. Asadej continued that, from a roadshow together with Prime Minister Anutin Charnvirakul in the United States, most of the investors they met were long-term funds that do not focus on day-to-day trading, and investors were mainly interested in asking the Prime Minister about the country's long-term policies, so it is possible to look past temporary volatility factors.

Japanese investors hold French bonds at a far higher share than the market benchmark. Bloomberg estimates that as of July, Japanese investors held about 23 trillion yen in French bonds, or roughly $145 billion, equal to 6.6% of Japan's total holdings of foreign debt securities, making it the most overweight eurozone investment relative to the Bloomberg Global Aggregate Index. The risk comes as the French bond market faces heavy pressure after the government failed to meet its budget deficit targets, compounded by policy gridlock and uncertainty ahead of next year's presidential election. The yield on 10-year French government bonds has now risen to about 5%, the highest since 2002, while French government bonds have returned minus 4.9% since the start of the year, making it the fourth-worst performing bond market in the world, and Japanese investors' holdings of French bonds have already fallen 2.5% from the end of last year. Hideo Shimomura of Fivestar Asset Management warned that the current selling of French bonds may only be the beginning, and that if the European Central Bank takes no action, the yield on 10-year French government bonds could rise to 7%. Meanwhile, the global bond funds at Sumitomo Mitsui DS Asset Management have already sold all of their French bond holdings over concerns about the country's fiscal position.

The Euro weakened against the British Pound to around 0.8475 in early European trading on Monday, pressured by French fiscal concerns following a steep bond market rout that stoked contagion fears across the Eurozone. Analysts at Brown Brothers Harriman noted that France's minority government has presented a plan to cut the budget deficit to 5.0% of GDP next year, but doubt the proposal will clear parliament without significant concessions, and warned that a rollover of the 2026 budget could push the deficit from 5.4% of GDP in 2026 to roughly 6.0% in 2027, moving France further from its European Commission commitment to bring the shortfall below 3% by 2029. Brent Donnelly, president of foreign exchange trading at Spectra Markets, said any budget promises made by the French government now are not very credible with a change of power coming soon. On the monetary policy side, Bank of England policymaker Catherine Mann said a rate hike is needed to manage inflationary risks, and markets are currently discounting roughly 30 basis points of rate hikes by the UK central bank through the end of the year, alongside approximately 90 basis points of cumulative tightening through 2027. On the daily chart, EUR/GBP remains capped below its key moving averages, with initial resistance at the Bollinger lower band around 0.8500 and further barriers at the Bollinger midline near 0.8565 and the 100-day simple moving average at 0.8580.

The Global Markets Group of Bank of Ayudhya, or BAY, expects the baht this week (5-9 October 2026) to move in a range of 33.30-33.85 baht per dollar, after the baht closed weaker at 33.55 baht per dollar last week, trading in a range of 33.45-33.71 baht per dollar and touching its weakest level in two months. The dollar index hit its highest level since May 2025, while US bond yields set new cycle highs, even though PCE inflation data came in below expectations and the ISM manufacturing index fell in September. The euro touched its weakest level in 17 months amid a sharp widening in the spread between French and German bond yields, after details of the French budget were poorly received by the market. Foreign investors sold 26.769 billion baht of Thai stocks and 10.068 billion baht of Thai bonds respectively. On the domestic front, the market will monitor September inflation, while the Bank of Thailand reported a current account surplus of 2.4 billion dollars in August.

Krungthai GLOBAL MARKETS strategists at Krungthai Bank, or KTB, assess the baht's range this week at 33.25 to 33.85 baht per dollar, with the currency's weakening momentum still intact and the risk open that the baht will slide to test the resistance zone of 33.85 baht per dollar. Thai players in the market are awaiting the September CPI inflation report, which is expected to rise to 3.17%, up 0.6% month on month. Core CPI is expected to rise to 1.60%, driven by higher energy prices in September and continued increases in food prices, including meat, vegetables and fruit, due to erratic weather, as well as ready-to-eat food prices following operators passing through costs and the boost from the government's economic stimulus measures. However, the cut in electricity charges will help slow the rise in inflation somewhat. On the Asian side, market players will await an assessment of Japan's economic outlook and the monetary policy direction of the Bank of Japan, or BOJ, through the wage growth report. Most recently, market players estimate the BOJ has about a 93% chance of raising rates one more time this year and may raise rates another two to three times next year. Meanwhile, analysts expect the Reserve Bank of India, or RBI, may raise its policy rate by 0.25%, or 25 basis points, to 5.50%, with a chance of further hikes, after India's inflation remains high and risks rising above the RBI's target range. The rupee has also reversed to weaken near its weakest point of the year again, which could further fuel inflation. The situation in the Middle East remains a key factor affecting the baht's direction through shifts in market players' views on the rate outlook for major central banks, which affects the dollar, long-term bond yields and gold prices, and also directly affects the Thai economy through volatile energy prices, transport costs and shipping freight rates. The baht still faces Two-Way Risk and can move in either direction. In the short term, the baht could continue to weaken if market players gradually raise the odds of a Fed rate hike, whether this year or next, depending on the Middle East situation, remarks from Fed officials and U.S. economic data reports. Recently, the 10-year U.S. bond yield has swung with energy prices tied to developments in the Middle East, with a 30-day correlation averaging above 72% over the past month, meaning the baht cannot clearly reverse to strengthen until market players begin to hope for a ceasefire negotiation between the United States and Iran.

Strengthen Power Corporation Public Company Limited, or SSP, is preparing to take part in bidding to produce electricity from a 1,500-megawatt community solar farm project. Chayut Leehajaroenkul, Chief Financial Officer, said the company has expertise in this area and sees it as an opportunity to expand its power generation base, and is now waiting for clarity from the relevant authorities on when applications will open. For its business outlook in the second half of 2026, the company expects a clear improvement from the first half, driven by the completion of the sale of the Yamaga solar farm in Japan in late August 2026 for a total value of about 1 billion baht, together with two community waste-to-energy plants with combined capacity of about 19.8 megawatts that are expected to begin gradually supplying commercial electricity late this year. In addition, the weaker baht, which has fallen to about 33.64 baht per US dollar, should help support revenue, since the company earns about 30% of its revenue in US dollars from overseas. As for its long-term two-to-three-year plan, the company is preparing to bring about 420 megawatts of new capacity into commercial operation, comprising three solar farms in Thailand totaling 108.6 megawatts and the 150-megawatt Bago wind farm in the Philippines in 2027, with additional projects continuing through 2030 totaling more than 146 megawatts. On the analyst side, Asia Plus Securities gave a buy recommendation on SSP shares with a target price of 8.30 baht, forecasting normal profit of 693.9 million baht in 2026, up 12.2% from the previous year, supported by higher output at the SPN solar plant after panel replacement was completed, the TTTV wind project returning to full-year operation, the first full year of revenue recognition from the LEO2 project in 2026, and the positive contribution from the waste-to-energy plants totaling 19.8 megawatts in late 2026, as well as revenue recognition from the 150-megawatt Bago Wind Farm next year, which will help profit continue growing in 2027.