Market Outlook. Highlight USD. Treasury Division TMU 01 :(66) TMU 02 :(66) TMU 03 :(66)

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1 Treasury Division TMU 01 :(66) TMU 02 :(66) TMU 03 :(66) Market Outlook June 2016 Highlight Last Week: The dollar rose, while global markets were fluctuated on Brexit polls that show a chance of the UK to leave the EU on the referendum that will be held on June 23. This Week: The highlight in this week is on the result of the referendum of the UK citizen to stay or leave the EU. Additionally, Thai investors may keep their eyes on Bank of Thailand comments on its policy rate in the meeting on June 22. D The Dollar index opened on Monday (13/6) at , slightly strengthened from Friday close (10/6) at The increasing Dollar index was due to better economic figures, for example, the University of Michigan consumer confidence (June) rose to 94.3 pts more than a forecast at 94.1 pts. Also, the retail sale in May rose to 0.5%, better than forecast at 0.4%. However, on Wednesday (15/6), the FED maintained interest rate at the range of % as expected. The Federal Reserve Chair, Janet Yellen, commented that the FED need to see greater economic figures in order to hike interest rate, while the contracting labor market and the Brexit risk are the major concern. Moreover, Thursday (16/6), the initial jobless claim increased to 277k, higher than forecast at 270k. As a result, the Dollar index was moving down in the range of last week and closing at on Friday (17/6). 1

2 Graph: Dollar Index (DXY) Daily Q.DXY Cndl, Q.DXY, Trade Price 20/06/2016, , , , , 0.689, (0.73%) SMA, Q.DXY, Trade Price(Last), 14 20/06/2016, /06/ /06/2016 (NYC) Price D June Source: Reuter Comments: This week, the Dollar index should move slightly. Investors are waiting for the referendum of Brexit on Thursday (23/6). However, many economic figures are in focus, e.g. new home sales and initial jobless claims on Thursday (23/6). EUR & GBP The euro opened on Monday (13/6) at /50 D/EUR, depreciating against the U.S. dollar from a previous closing level on Friday (10/6) at /93 D/EUR. The euro was pressured by an increasing Brexit fears. Moreover, German 10Year Bunds slipped into negative territory for the first time on record as concerned over the result of Brexit referendum in the coming June 23 rd. However, the euro rose against the U.S. dollar on Wednesday (15/6) after the Federal Reserve held the interest rates steady at the level between 0.25% 0.50% as expected and lowered its rate hike outlook for each of the next two years. The euro also recovered on Friday (17/6) as the killing of a proeu British lawmaker may alter the balance of opinion in Britain s referendum on EU membership. During last week, the euro had moved in a range of D/EUR before closing on Friday (17/6) at /57 D/EUR. 2

3 The pound opened on Monday (13/6) at /21 D/GBP, depreciating against the U.S. dollar from previous closing level on Friday (10/6) at /27 D/GBP. The pound was under pressured amid fears that whether the U.K. will exit from the European Union (EU) in the June 23 referendum or not which could trigger uncertainty in financial markets. Moreover, YouGov poll showed that Leave campaign overtook the Stay campaign in the last week. A separate poll from the Guardian newspaper found that 53% supported the Leave campaign compared with 47% supported the remain campaign. Furthermore, the major world leaders including U.K. Prime Minister David Cameron, Germany chancellor Angela Merkel and International Monetary Fund (IMF) managing director Christine Lagarde warned that a British departure from the EU could be the largest immediate risk facing in global financial markets. The pound remained lower after the data on Tuesday (14/6) showed that the annual rate of U.K. inflation remained steady at 0.3% in May, slightly below economists expectations for an increase of 0.4%. However, the pound received an additional boost on Wednesday (15/6) after the Office for National Statistics said Britain s unemployment rate fell from 5.1% to 5.0% in April. Moreover, average earnings excluding bonuses rose by 2.3% in the three months to April from a year earlier, better than analysts expectation of the increase 2.0%. The pound rebounded as widespread Brexit fears eased and the Bank of England (BOE) maintained its interest rate at 0.5%. Moreover, the pound found support after U.K. retail sales rose 6.0% in May from the same month a year earlier, the biggest annual rise since September, but economists had expected a 3.9% increase. The pound also reacted to news that Brishtish MP Jo Cox passed away after she was shot and stabbed by an attacker in West Yorkshire. News of the tragedy raised speculation that Brexit referendum could be delayed and momentum of surrounding the Leave campaign slowed. During last week, the pound moved between the range of D/GBP before closing on Friday (17/6) at /44D/GBP last week. 3

4 Graph: EUR and GBP Daily QEUR= Cndl, QEUR=, Bid 17/06/2016, , , , , , (+0.29%) 08/06/ /06/2016 (GMT) Price D June Auto Daily QGBP= Cndl, QGBP=, Bid 17/06/2016, , , , , , (+0.32%) 08/06/ /06/2016 (GMT) Price D June 2016 Source: Reuters 1.4 Auto Comments: During this week, the market will be looking ahead of the outcome of Thursday s (23/6) Brexit referendum. Two opinion polls published on Saturday (18/6) showed that support for the 'Remain' campaign overtook a vote to leave. Moreover, There will be significant events which are likely to affect the markets such as German ZEW economic sentiment (21/6) and German Ifo business climate (24/6). Hence, we believe that both the EUR and the GBP will move within the range of D/EUR and D/GBP in this week. 4

5 AUD & NZD Last week, the Aussie opened on Monday (13/06) at /69 D/AUD, depreciated from Friday s (10/06) closing level at /02 D/AUD. The Aussie edged higher on Friday (17/06) along with commodities; Copper was 0.8% stronger, silver and palladium were also trading in positive territories. In addition, the Australian employment change improved notably to 17,900 in May, up from 800 scored in April. The jobless rate stayed at 5.7% in May. The Aussie moved in the range of D/AUD and closed on Friday (17/06) at /99 D/AUD. The Kiwi opened on Monday (13/06) at /43 D/NZD, depreciated from Friday s (10/06) closing level at /99 D/NZD. The kiwi modestly rose on Friday (17/06), taking advantage from bouncing oil prices and own best figures. In addition, the kiwi was heading for a similar result on weekly basis. Looking more closely, the Business NewZealandBNZ Performance of Manufacturing Index (PMI) rose to 57.1 in May, the highest since January, from revises 56.6 in April. Also, the NZ production expanded from 58.7 in April to 61.1 last month, the strongest since December An employment hit a fourmonth high of 52.8 in May and new orders figure accelerated a touch, from 59.7 to However, investors were influenced by sentiment shift ahead of Brexit vote. The kiwi moved in the range of D/NZD last week and closed at /06 on Friday (03/06). Graph: AUD and NZD Daily QAUD= Cndl, QAUD=, Bid 20/06/2016, , , , , , (+0.47%) 07/06/ /06/2016 (GMT) June 2016 Price D

6 Daily QNZD= Cndl, QNZD=, Bid 20/06/2016, , , , , , (+0.52%) 08/06/ /06/2016 (GMT) June 2016 Price D Source: Reuter Comments: This week, the Aussie and the Kiwi could move little elevate against the greenback, following several moderate up and down swings amid directionless trading pattern. Market will wait to see the key event of the year, due on Thursday, Brexit, where the volatility will most likely be extreme; however, the outcome of the EU referendum on the pair may be hard to pin down. The Aussie could move in the range of D/AUD and the Kiwi could move in the range of D/NZD. JPY The Yen opened at /93 JPY/D, appreciated from the closing level on Friday (10/6) at /99 JPY/D. The yen appreciated along the week as increased in demand for safehaven asset. The Yen continuing rose as Brexit put a lot of pressure to the market. Moreover, the Bank of Japan kept the policy steady and offered a slightly weaker view on the outlook for inflation. It also left unchanged the 0.1 percent negative interest rate with BoJ Governor Kuroda s said that he believes the effect of negative rates to gradually appear on the real economy from now on. However, Japanese Finance Minister Taro Aso said on Friday (17/6) that he was deeply concerned about onesided, rapid and speculative moves and planned to hold a meeting later in the day to discuss financial markets soon. 6

7 Graph: JPY Daily QJPY= Cndl, QJPY=, Bid 20/06/2016, , , , , +0.52, (+0.50%) 10/06/ /06/2016 (BKK) Price /D June Source: Reuters Comments: This week, the Yen s movement will depends on referendum from England on Thursday (23/6). Besides, the important economic data which will release is flash manufacturing PMI on Thursday too. We expect the Yen will move between JPY/D. THB Thai Baht opened on Monday (13/06) at 35.25/27 THB/D, almost the same level compared to the closing level on Friday (10/06) at 35.24/26 THB/D. At the beginning of the week, the Thai Baht moved in an appreciating trend after the disappointing in U.S. economic data. On previous Friday (10/6), the University of Michigan said the U.S. consumer sentiment index fell to 94.3 in June from 94.7 in May. On Tuesday (14/6), the U.S. commerce department said that the retail sales rose by 0.5% in May, declined from 1.3% increase in the previous month. However, the Thai Baht reversed to be depreciated against the dollar and hit the lowest point at D/THB ahead of the Federal Open Market Committee (FOMC) meeting. On Wednesday (15/6), the Thai Baht strengthened compared to the dollar after the Federal Reserve (Fed) kept its interest rate unchanged at the level between 0.25 and 0.50% and signaled that the path of future rate increase 7

8 would be slow. In addition, the Fed also cut its GDP forecast for 2016 to 2.0% from 2.2%. At the end of the week, the Thai Baht weakened against the dollar despite the release of weak U.S. economic reports. The U.S. Department of Labor said that the jobless claims increased by 13,000 to 277,000 jobs from the previous week s total of 264,000 jobs and the U.S. Commerce Department said consumer prices rose only 0.2% in May, compared to the previous month of a 0.4% gain. During the week, Thai Baht moved in the range between THB/D and closed on Friday (17/06) at 35.23/25 THB/D. Graph: THB Daily QTHB= Cndl, QTHB=, Bid 20/06/2016, 35.21, 35.24, 35.16, 35.20, 0.05, (0.14%) 10/06/ /06/2016 (GMT) Price /D Source: Reuters June 2016 Auto Comment: This week, we will wait for the Monetary Policy Committee (MPC) meeting on Wednesday (22/6) and we believe that the MPC will keep its benchmark interest rate on hold at 1.50%. Moreover, we will focus on Thailand s export and import data from the Ministry of Commerce on Friday (24/6). We expect that the Thai Baht will move between THB/D. 8

9 FX Forecast Economic Calendar Last Week Currency Support Resistance D/THB EUR/D GBP/D AUD/D NZD/D D/JPY Date CCY Event Survey Actual Prior Jun13 BSI Large All Industry QoQ 2Q Jun14 BSI Large Manufacturing QoQ 2Q GE Germany Third Quarter Manpower Employment Outlook Manpower Survey 3Q Industrial Production MoM Apr F 0.50% 0.30% Industrial Production YoY Apr F 3.30% 3.50% Capacity Utilization MoM Apr 1.00% 3.20% UK Bloomberg June United Kingdom Economic Survey (Table) IT CPI FOI Index Ex Tobacco May IT CPI EU Harmonized YoY May F 0.30% 0.30% 0.30% UK CPI MoM May 0.30% 0.20% 0.10% UK CPI YoY May 0.40% 0.30% 0.30% UK CPI Core YoY May 1.30% 1.20% 1.20% UK Retail Price Index May UK RPI MoM May 0.30% 0.30% 0.10% UK RPI YoY May 1.50% 1.40% 1.30% UK RPI Ex Mort Int.Payments (YoY) May 1.50% 1.50% 1.40% UK PPI Input NSA MoM May 0.90% 2.60% 0.90% UK PPI Input NSA YoY May 5.10% 3.90% 6.50% UK PPI Output NSA MoM May 0.30% 0.10% 0.40% UK PPI Output NSA YoY May 0.50% 0.70% 0.70% UK PPI Output Core NSA MoM May 0.10% 0.00% 0.20% UK PPI Output Core NSA YoY May 0.60% 0.50% 0.50% UK First Publication of New Methodology UK House Prices EC Industrial Production SA MoM Apr 0.80% 1.10% 0.80% EC Industrial Production WDA YoY Apr 1.40% 2.00% 0.20% EC Employment QoQ 1Q 0.30% 0.30% EC Employment YoY 1Q 1.40% 1.20% 9

10 Jun15 NFIB Small Business Optimism May Budget Balance YTD May b b b Import Price Index MoM May 0.70% 1.40% 0.30% Import Price Index YoY May 5.90% 5.00% 5.70% CA Teranet/National Bank HPI MoM May 1.80% 1.20% Retail Sales Advance MoM May 0.30% 0.50% 1.30% CA Teranet/National Bank HP Index May Retail Sales Ex Auto MoM May 0.40% 0.40% 0.80% CA Teranet/National Bank HPI YoY May 9.00% 8.10% Retail Sales Ex Auto and Gas May 0.30% 0.30% 0.60% Retail Sales Control Group May 0.30% 0.40% 0.90% Business Inventories Apr 0.20% 0.10% 0.40% Bloomberg June Japan Economic Survey (Table) Machine Tool Orders YoY May F 24.70% 25.00% FR CPI EU Harmonized MoM May F 0.30% 0.50% 0.30% FR CPI EU Harmonized YoY May F 0.00% 0.10% 0.00% FR CPI MoM May F 0.40% 0.40% 0.40% FR CPI YoY May F 0.10% 0.00% 0.10% FR CPI ExTobacco Index May UK Claimant Count Rate May 2.10% 2.20% 2.10% UK Jobless Claims Change May 0.0k 0.4k 2.4k UK Average Weekly Earnings 3M/YoY Apr 1.70% 2.00% 2.00% UK Weekly Earnings ex Bonus 3M/YoY Apr 2.00% 2.30% 2.10% UK ILO Unemployment Rate 3Mths Apr 5.10% 5.00% 5.10% UK Employment Change 3M/3M Apr 60k 55k 44k IT General Government Debt Apr b b EC Trade Balance SA Apr 21.5b 28.0b 22.3b EC Trade Balance NSA Apr 26.0b 27.5b 28.6b MBA Mortgage Applications Jun % 9.30% CA Manufacturing Sales MoM Apr 0.60% 1.00% 0.90% PPI Final Demand MoM May 0.30% 0.40% 0.20% PPI Ex Food and Energy MoM May 0.10% 0.30% 0.10% PPI Ex Food, Energy, Trade MoM May 0.10% 0.10% 0.30% PPI Final Demand YoY May 0.10% 0.10% 0.00% PPI Ex Food and Energy YoY May 1.00% 1.20% 0.90% PPI Ex Food, Energy, Trade YoY May 0.80% 0.90% Empire Manufacturing Jun GDP YoY 1Q P 1.20% 1.20% 1.20% CA Existing Home Sales MoM May 2.80% 3.10% Industrial Production MoM May 0.20% 0.40% 0.70% Capacity Utilization May 75.20% 74.90% 75.40% Manufacturing (SIC) Production May 0.10% 0.40% 0.30% Jun16 FOMC Rate Decision (Upper Bound) Jun % 0.50% 0.50% 10

11 FOMC Rate Decision (Lower Bound) Fed Summary of Economic Projections 11 Jun % 0.25% 0.25% Total Net TIC Flows Apr $80.4b $98.3b Net Longterm TIC Flows Apr $79.6b $78.1b Japan Buying Foreign Bonds Japan Buying Foreign Stocks Foreign Buying Japan Bonds Foreign Buying Japan Stocks BOJ Annual Rise in Monetary Base BOJ Basic Balance Rate BOJ Macro AddOn Balance Rate BOJ Policy Rate Jun 10 Jun 10 Jun 10 Jun 10 Jun 16 Jun 16 Jun 16 Jun 16 Tokyo Condominium Sales YoY May 867.8b 893.9b 129.6b 35.2b 764.3b 611.0b 128.3b 97.8b 80t 80t 80t 0.10% 0.10% 0.00% 0.00% 0.10% 0.10% 0.10% 14.10% 13.50% EC EU27 New Car Registrations May 16.00% 9.10% EC ECB Publishes Economic Bulletin UK Retail Sales Ex Auto Fuel MoM May 0.30% 1.00% 1.50% UK Retail Sales Ex Auto Fuel YoY May 3.80% 5.70% 4.20% UK Retail Sales Inc Auto Fuel MoM May 0.20% 0.90% 1.30% UK Retail Sales Inc Auto Fuel YoY May 3.90% 6.00% 4.30% EC CPI MoM May 0.30% 0.40% 0.00% EC CPI YoY May F 0.10% 0.10% 0.10% EC CPI Core YoY May F 0.80% 0.80% 0.80% UK Bank of England Bank Rate Jun % 0.50% 0.50% UK BOE Asset Purchase Target Jun 375b 375b 375b CA Int'l Securities Transactions Apr 15.52b 17.17b Revisions: Current Account Current Account Balance 1Q Initial Jobless Claims Continuing Claims Jun 11 Jun 04 $125.0b $124.7b $125.3b 270k 277k 264k 2140k 2157k 2095k Philadelphia Fed Business Outlook Jun CPI MoM May 0.30% 0.20% 0.40% CPI Ex Food and Energy MoM May 0.20% 0.20% 0.20% CPI YoY May 1.10% 1.00% 1.10% CPI Ex Food and Energy YoY May 2.20% 2.20% 2.10% CPI Index NSA May CPI Core Index SA May Real Avg Weekly Earnings YoY May 1.10% 1.30% Industrial Production YoY May 0.80% 0.70% 0.50% CPI Weekly YTD Jun % 2.90%

12 CPI WoW Gold and Forex Reserve Jun 14 Jun % 0.00% 393.9b 388.9b Bloomberg Economic Expectations Jun Bloomberg Consumer Comfort Jun NAHB Housing Market Index Jun BOJ Monetary Policy Statement (Table) Jun17 FR Wages QoQ 1Q F 0.50% 0.50% 0.50% EC ECB Current Account SA Apr 36.2b 27.3b EC Current Account NSA Apr 34.0b 32.3b Money Supply Narrow Def Jun t 8.45t IT Trade Balance Total Apr 4520m 5365m IT Trade Balance EU Apr 918m 1331m IT Current Account Balance Apr 4655m 2245m EC Labour Costs YoY 1Q 1.70% 1.30% Housing Starts May 1150k 1164k 1172k Housing Starts MoM May 1.90% 0.30% 6.60% Building Permits May 1145k 1138k 1116k CA CPI NSA MoM May 0.50% 0.40% 0.30% Building Permits MoM May 1.30% 0.70% 3.60% CA CPI YoY May 1.60% 1.50% 1.70% CA Consumer Price Index May CA CPI Core MoM May 0.30% 0.30% 0.20% CA CPI Core YoY May 2.10% 2.10% 2.20% CA CPI SA MoM May 0.30% 0.20% 0.20% CA CPI Core SA MoM May 0.20% 0.20% 0.20% PPI MoM May 0.90% 1.00% 2.60% PPI YoY May 2.50% 3.20% 0.90% Cabinet Office Monthly Economic Report for June (Table) This Week Date CCY Event Survey Actual Prior Jun21 All Industry Activity Index MoM Apr 1.20% 0.10% Supermarket Sales YoY May 0.70% UK Public Finances (PSNCR) May 2.4b UK Central Government NCR May 3.0b UK Public Sector Net Borrowing May 9.4b 6.6b UK PSNB ex Banking Groups May 9.5b 7.2b GE ZEW Survey Current Situation Jun GE ZEW Survey Expectations Jun EC ZEW Survey Expectations Jun 16.8 UK CBI Trends Total Orders Jun

13 UK CBI Trends Selling Prices Jun 2 Jun22 MBA Mortgage Applications Jun % CA Retail Sales MoM Apr 0.80% 1.00% CA Retail Sales Ex Auto MoM Apr 0.60% 0.30% FHFA House Price Index MoM Apr 0.60% 0.70% CPI Weekly YTD CPI WoW Jun 20 Jun % 0.10% EC Consumer Confidence Jun A 7 7 Existing Home Sales May 5.55m 5.45m Existing Home Sales MoM May 1.80% 1.70% Jun23 Japan Buying Foreign Bonds Japan Buying Foreign Stocks Foreign Buying Japan Bonds Foreign Buying Japan Stocks Jun 17 Jun 17 Jun 17 Jun b 129.6b 764.3b 128.3b Nikkei Japan PMI Mfg Jun P 47.7 Leading Index CI Apr F Coincident Index Apr F FR Business Confidence Jun FR Manufacturing Confidence Jun FR Production Outlook Indicator Jun 6 FR OwnCompany Production Outlook Jun 8 FR Markit France Manufacturing PMI Jun P FR Markit France Services PMI Jun P FR Markit France Composite PMI Jun P GE Markit/BME Germany Manufacturing PMI Jun P GE Markit Germany Services PMI Jun P GE Markit/BME Germany Composite PMI Jun P IT Industrial Sales MoM Apr 1.60% IT Industrial Sales WDA YoY Apr 3.60% IT Industrial Orders MoM Apr 3.30% IT Industrial Orders NSA YoY Apr 0.10% EC Markit Eurozone Manufacturing PMI Jun P EC Markit Eurozone Services PMI Jun P EC Markit Eurozone Composite PMI Jun P Chicago Fed Nat Activity Index May Initial Jobless Claims Continuing Claims Gold and Forex Reserve Bloomberg Consumer Comfort Jun 18 Jun 11 Jun 17 Jun k 277k 2144k 2157k 393.9b 42.1 Markit Manufacturing PMI Jun P

14 New Home Sales May 560k 619k Leading Index May 0.10% 0.60% New Home Sales MoM May 9.50% 16.60% Kansas City Fed Manf. Activity Jun 8 5 Jun24 PPI Services YoY May 0.10% 0.20% FR GDP QoQ 1Q F 0.60% 0.60% FR GDP YoY 1Q F 1.40% 1.40% Bloomberg June Russia Economic Survey GE IFO Business Climate Jun GE IFO Current Assessment Jun GE IFO Expectations Jun Money Supply Narrow Def Jun t IT Retail Sales MoM Apr 0.40% 0.60% IT Retail Sales YoY Apr 2.20% UK BBA Loans for House Purchase May IT Hourly Wages MoM May 0.00% IT Hourly Wages YoY May 0.60% Durable Goods Orders May P 0.40% 3.40% Durables Ex Transportation May P 0.10% 0.50% Cap Goods Orders Nondef Ex Air May P 0.30% 0.60% Cap Goods Ship Nondef Ex Air May P 0.40% U. of Mich. Sentiment Jun F U. of Mich. Current Conditions Jun F U. of Mich. Expectations Jun F 83.2 U. of Mich. 1 Yr Inflation Jun F 2.40% U. of Mich. 510 Yr Inflation Jun F 2.30% FR Total Jobseekers May k FR Jobseekers Net Change May 19.9 GE Import Price Index MoM May 0.50% 0.10% GE Import Price Index YoY May 5.90% 6.60% 14