nvestors are worried about the impact of China’s virus outbreak, leading to sales of the baht.

The research house said that other currencies in the Asian region also had weakened along with the baht. Sales of Thai shares by foreign investors are also attributed to the weakening of the baht, Kasikorn Research said, predicting the baht would move in a range of Bt31 to 31.20 against the greenback.

The impact of the coronavirus outbreak is seen as cutting into Thailand’s current account surplus which in recent years had resulted in a relatively large surplus and pushed up the baht. This had caused concern among exporters who blamed the stronger baht for the slump in exports.

The S&P 500 Index wiped out an early advance after Federal Reserve Chairman Jerome Powell said that uncertainties about the outlook remain – including those around trade policy and the coronavirus. Treasuries extended gains after he noted that the committee revised its language about inflation to clarify that policy makers aren’t comfortable with it below 2%.

In a highly anticipated decision, the Fed kept its key interest rate unchanged and continued to signal policy would stay on hold for the time being. As the earnings season continued to roll in Apple’s strong results sent the iPhone maker to a record while General Electric’s outlook topped Wall Street’s estimates. Boeing rallied on news that the planemaker burned less cash than expected.

– – –

Some other corporate highlights:

– McDonald’s sales in its home market beat expectations.

– Mastercard, Dow Inc. and T. Rowe Price reported better-than-estimated results.

– AT&T topped earnings estimates as cost cuts helped offset steep TV-subscriber losses and higher spending on its media business.

– EBay, Advanced Micro Devices and Xilinx gave lackluster guidance.

Elsewhere, oil fell after a government report showed the biggest jump in U.S. crude stockpiles since November. The European Parliament approved Prime Minister Boris Johnson’s Brexit deal, clearing the way for the U.K. to leave the EU on Jan. 31 with an agreement that, for the time being, will avoid a chaotic rupture.

– – –

Here are some events to watch out for this week:

– Samsung Electronics, International Paper, Unilever and Shell report on Thursday, followed by South Korean chip maker SK Hynix, Chevron, Caterpillar and Exxon Mobil all on Friday.

– The Bank of England meeting on Thursday is highly anticipated after a series of dovish comments raised speculation policy makers could lower interest rates.

– The U.S. reports fourth-quarter GDP on Thursday.

-The U.K. is scheduled to leave the European Union on Friday.

– – –

These are some of the main moves in markets:

Stocks

– The S&P 500 fell 0.1% as of 4 p.m. Eastern time. It closed at 3273.40, down 0.09 %. Nasdaq closed at 9275.16, up 0.06 % and Dow Jones Industrial Average closed at 28734.45, up 0.04 %.

– The Stoxx Europe 600 Index climbed 0.4%.

– The MSCI Emerging Market Index dipped 0.5%.

Currencies

– The Bloomberg Dollar Spot Index was little changed.

– The euro dipped 0.1% to $1.1006.

– The Japanese yen strengthened 0.1% to 109.06 per dollar.

Bonds

– The yield on 10-year Treasuries dipped seven basis points, to 1.59%.

– Germany’s 10-year yield fell four basis points, to -0.38%.

– Britain’s 10-year yield decreased four basis points, to 0.516%.

Commodities

– The Bloomberg Commodity Index dipped 0.6%.

– West Texas Intermediate crude dipped 0.6% to $53.15 a barrel.

– Gold rose 0.4% to $1,582 an ounce.

The interest rate remains in a range of 1.5 to 1.75%, a low level by historical standards that is meant to give a modest boost to the economy by encouraging more lending and home buying. The Fed lowered interest rates three times last year, taking the rate down from a post-recession high of nearly 2.5%.

Interest rates are at an “appropriate” level the Fed concluded, but it said it will “monitor” ongoing issues at home and abroad.

Fed officials have been closely monitoring the impact of the trade war on the economy and there are new concerns about the deadly coronavirus in China and what that might mean to global supply chains, among other things.

Fears of a U.S. recession this year have largely faded since the Fed began cutting rates in July. Trump’s partial trade deal with China has also helped calm anxieties on Wall Street and among business leaders. On top of that, the Fed has been buying a substantial amount Treasury Bills since September, which some argue has propped up the stock market. The S&P 500 stock market index has risen about 10% since the Fed made a special announcement in October that it would buy more T-bills. Fed leaders insist these are merely technical adjustment to the central bank’s plumbing.

The Fed painted a mostly upbeat picture of the U.S. economy in a statement Wednesday, saying the economy is growing at a “moderate rate,” and the job market remains “strong.” But the Fed notably downgraded the language it uses to describe consumer spending, which accounts for 70% of the economy.

“Household spending has been rising at a moderate pace,” the Fed said Wednesday. Last year the Fed describe consumer spending as “strong.”

Fed leaders do not anticipate moving interest rates up or down at all in 2020, but Wall Street is currently predicting at least one cut, likely in July or September. Fed Chair Powell has said it would take a “material reassessment” of the economy’s health for the central bank to alter rates.

“The Fed is on standby, rather than on hold, which is a subtle but important difference,” said Axel Weber, chair of UBS bank and former head of Germany’s central bank, at the World Economic Forum last week.

Beyond interest rates, many investors are paying close attention to the Powell’s plans for the Fed’s balance sheet.

By 2017, the Fed held about $4.5 trillion in assets – mostly U.S. government bonds and mortgage-backed securities – as part of its efforts to stimulate the economy and keep interest rates low. But the Fed shed roughly $700 billion from mid-2017 through mid-2019. Banks grew worried that there was not enough liquidity in the system, especially cash “reserves” on hand at the Fed.

Since September, the Fed has bought about $400 billion worth of short-term Treasury bills to ensure there is enough money in the system to keep overnight borrowing rates for banks where the Fed wants them. Powell has indicated the central bank will continue pumping liquidity into the system “at least” through the second quarter, but he has not given much clarity around how many reserves he thinks the system needs or how the Fed will ween the market off this additional safety net.

“Our Treasury bill purchases should not be confused with the large-scale asset purchase programs that we deployed after the financial crisis,” Powell said in October.

The Fed’s statement Wednesday did not provide any clarify on plans for the balance sheet.

“This is tricky terrain for Powell and if mishandled could be disruptive,” wrote Krishna Guha, vice chair of Evercore ISI research in a note to clients this week.

The forecast currently stands at 2.5-3 per cent.

But Kalin believes Chinese travellers will be back to Thailand once the virus outbreak that originated in central Wuhan is contained.

Speaking at a separate event on Wednesday (January 29), Deputy Prime Minister Somkid Jatusripitak said he wants the Finance Ministry to seek measures to encourage Thais to travel to offset the plunge in Chinese visitors due to the outbreak. He said it was one possible way of cushioning the blow to the Thai economy.

The Council of the Economic Ministers will discuss the virus’ impact on tourism on January 31, said Kobsak Pootrakool, deputy secretary-general for political affairs to the prime minister.

They will also consider a private-sector proposal that tourism-related businesses be allowed to postpone their tax payment by six months, he said.

Thanawat Phonvichai, president of the University of the Thai Chamber of Commerce, earlier predictedthat the coronavirus outbreak, if it continues into March, could cost the Thai tourism industry between Bt80 billion and Bt100 billion, or between 0.5 and 0.7 percentage points of national GDP.

He based his calculation on one million Chinese arrivals in Thailand per month, each person spending on average Bt50,000.

The virus has collapsed arrival numbers since the Chinese government banned overseas group tours and is hurting airlines, hotels and resorts and souvenir sales.

West Virginia’s economy contracted the most, while a decline in neighboring Pennsylvania was among the worst in the nation, based on state coincident economic indexes released by the regional Fed bank on Wednesday. While gauges increased in 39 states, a measure of economic activity for the nation as a whole fell to 62 at the end of the fourth quarter, the lowest reading since 2010.

A faltering economic outlook in Pennsylvania may play a role in President Donald Trump’s re-election bid. While employment increased in the Keystone State over the past three months, the unemployment rate increased significantly and average hours worked in manufacturing decreased.

Economies in Delaware, Iowa, Montana, Missouri, Oklahoma, and Vermont also declined compared with three months earlier. The three-month diffusion index now shows the greatest number of states contracting since the recession.

Nonetheless, the state-level figures are more volatile than national data, and single events, such as hurricanes, plant shutdowns, or temporary swings in demand for a particular product, can have outsize effects on those economies. The longest-running expansion on record is not expected to end soon, according to the consensus of economists surveyed by Bloomberg.

The coincident indexes combine four state-level indicators to summarize current economic conditions with a single statistic. The four state-level variables are payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and inflation-adjusted wages and salaries.

The U.S.-Mexico-Canada Agreement, or USMCA, delivers on one of Trump’s core campaign promises: to replace the Clinton-era North American Free Trade agreement that the president said has drained the U.S. of jobs.

“We are finally ending the NAFTA nightmare,” Trump said Wednesday at a signing ceremony on the White House South Lawn. He then read through an extensive list of Republican lawmakers, thanking them for their help passing the deal.

The trade accord marks a rare moment of bipartisanship, but the two sides aren’t sharing the glory. The White House attendance list for the event included 71 Republican lawmakers but no Democrats, who say they weren’t invited. Rep. Collin Peterson, the only remaining Democrat to vote against both articles of impeachment against Trump, said through a spokesman that he was invited but couldn’t attend. A White House spokesman didn’t immediately respond to questions on the invitations.

Democrats have taken aim at Trump’s economic policies — including tax cuts that benefited corporations and the wealthy — but attacking his approach to trade has proved more complicated as they compete for votes in swing states that have seen manufacturing jobs disappear.

Trump is scheduled to travel Thursday to Michigan and Iowa — where he’s expected to tout the agreement just as Democrats try to win over voters in next week’s Iowa caucuses.

The White House was able to garner bipartisan support for the USMCA by adding labor safeguards and altering protections for drug patents. The pact provides expanded access for U.S. agricultural exports, new rules of origin for auto parts and additional protections for internet companies.

White House aides argue that the deal shows that Trump is continuing to get work done despite the ongoing Senate impeachment trial over his efforts to pressure Ukraine to investigate former Vice President Joe Biden, a chief 2020 rival for the White House.

“He’s talked about USMCA, and he talked about the pro-growth initiatives and the economy that has boomed under him. So he keeps working — that’s fine,” White House Press Secretary Stephanie Grisham said in an interview with Fox News last Friday. “They’ll continue to scream impeachment — that’s fine.”

The new trade provisions are projected to add about 0.35% to the economy after six years. But the accord’s passage has had a more immediate effect on investors, easing concerns that Trump could disrupt the economy by pulling out of Nafta without a new deal in place.

Since Dec. 10 — when House Speaker Nancy Pelosi announced that she had struck a deal with the White House to pass the USMCA — the S&P 500 Index has gained about 4.6% and the Dow Jones Industrial Average has improved more than 3%. Markets were also bolstered during that period by a “phase one” trade deal with China.

Speaking before the signing, Pelosi said Democrats only agreed to support the deal after the White House caved to their demands for greater protections for American workers and the environment.

“What the president is signing is quite different than what the president sent us,” Pelosi said at a press conference on Capitol Hill.

House Ways and Means Chairman Richard Neal, D-Mass., said “the only reason the president is having the signing is because of the work House Democrats” did to improve labor and environmental protections.

A record 56% of Americans approve of Trump’s handling of the economy, according to a Washington Post and ABC News poll released this week. That’s a 10 percentage point improvement from September. And optimism about the economy appears to be off-setting the political damage from impeachment. The president’s overall approval rating matched his record high of 44% in the same survey.At the same time, just 5% of Americans say they disapprove of the USMCA, according to a Monmouth University poll released Tuesday.

Those trends — along with bipartisan congressional support for the pact — have effectively made USMCA a non-issue in the Democratic primaries.

Sen. Bernie Sanders of Vermont was the only Democratic presidential candidate to oppose the deal. He said it was an improvement over NAFTA but fell short of adequately protecting American jobs: “It is not going to stop outsourcing, it is not going to stop corporations from moving to Mexico.”

Sen. Elizabeth Warren, a Massachusetts Democrat, initially joined Sanders in criticizing the deal. During a 2018 speech on foreign policy at American University in Washington, she said the agreement, as written, wouldn’t halt outsourcing, raise wages or create jobs. But in January, she announced she would vote for it. Her campaign said the revised deal dropped a provision that would make it harder to bring down prescription drug prices, and offered stronger labor standards and more certainty for farmers.

Sen. Amy Klobuchar of Minnesota, who is running as a centrist alternative to the progressive Sanders, said in December she would vote for the pact. A day later, her moderate rival, Joe Biden, joined in support, emphasizing the elimination of loopholes for drug companies and strengthening enforcement for labor and environmental standards.

“What I’ve seen change is that the vast majority of the labor movement supported it,” Biden told reporters in Los Angeles.

Trump is looking to press his advantage on the campaign trail Thursday. The president will speak first at a Michigan auto parts facility in Macomb County, where the largest employers are three major automakers — General Motors, Fiat Chrysler Automobiles and Ford. During Trump’s last visit to Michigan in December, he touted USMCA as “great for the automobile business.”

Later Thursday, the president will head to Iowa before that state’s first-in-the-nation presidential caucuses. He is expected to tout the trade deal’s benefits for farmers in the region.

While companies across the country could benefit from the pact, many of the advantages appear clustered in swing states that could prove pivotal in November’s presidential election.

Stricter rules for auto manufacturing are intended to bolster production in the U.S. as well as the use of American steel and aluminum, which could help states including Michigan and Pennsylvania.

According to the administration, the deal would create 76,000 auto jobs and result in $34 billion in new automotive manufacturing investments. It also opens Canada’s market to U.S. dairy producers, an important issue for Wisconsin, and is expected to create 176,000 new jobs.

The president’s victory tour begins with Wednesday’s ceremony at the White House, but his signature won’t finalize the agreement. Canada still must ratify the deal, and Prime Minister Justin Trudeau — who lost his parliamentary majority in October elections — may need to broker deals with his political rivals to ensure passage.

Gross domestic product probably climbed at an annualized 2.1% rate for a second straight quarter, according to the median forecast in a Bloomberg survey of economists before the Commerce Department’s report on Thursday. However, the principal sources of fuel for the top-line number — a narrower trade deficit, driven almost entirely by a drop in imports, and stronger residential investment — likely helped offset a pullback in personal consumption.

Household spending, coming off the best consecutive quarters since late-2014 to early 2015, kept economic growth on pace last year through stiff headwinds including a corporate investment slowdown, the U.S.-China trade war and the grounding of Boeing Co.’s 737 Max plane. But in the fourth quarter, economists forecast personal consumption rose just 2%, down from 3.2% in the third quarter and 4.6% in the second.

A downshift in spending is in line with economists’ expectations for a moderating growth picture that makes achieving President Donald Trump’s goal of 3% economic growth more challenging ahead of the November election. Year-over-year GDP growth is forecast to slow to 1.8% in the fourth quarter of 2020, down from 2.3% in 2019 and 2.5% in 2018.

While still a solid pace, the question of 2020 becomes: “Can the consumer continue to sustain the expansion while we’re in this soft patch of business spending?” said Brett Ryan, senior U.S. economist at Deutsche Bank. “The fourth-quarter GDP data may call that into question.”

Consumer spending, which accounts for about 70% of GDP, is always an important driver of growth, but two consecutive quarters of falling business investment have shifted the responsibility of keeping the expansion afloat squarely on the back of American shoppers.

While consumers and the economy had the benefit of three Federal Reserve rate cuts in 2019, the central bank’s policy makers are seen keeping borrowing costs steady at their meeting Wednesday and the rest of the year. Still, traders are increasingly projecting an interest-rate cut this year given the quickly spreading coronavirus in China that has the potential to disrupt demand.

A healthy labor market — characterized by the lowest unemployment rate in a half century and rising participation — and elevated consumer sentiment should underpin spending in the months ahead, but the waning effects of tax cuts along with moderate wage gains may limit consumption.

At the same time, while consumer spending on goods and services may have cooled in the fourth quarter, Americans were busy buying homes. After more than a year of weighing on growth, a housing rebound is expected to soften the blow from another quarter of lackluster nonresidential investment.

Meanwhile, net exports could add 1.7 percentage points to GDP, offsetting a drag from inventories, according to Citigroup analysts. The outsize contribution would be the most since 2009.

Like the overall GDP reading, the strength stems more from the figure’s accounting than actual strength in the underlying fundamentals. Exports have increased slightly but remain broadly unchanged while imports have sharply dropped.

Offsetting a weaker consumer are “lower imports, which is generally not a wonderful sign in terms of the vitality of the domestic economy,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. “When the economy is strong and demand is strong, imports tend to grow, not shrink.”

The severity of the pullback, however, probably reflects American companies trying to get ahead of some of the tariffs earlier in the year. Leading up to the Sept. 1 U.S. tariffs on Chinese consumer goods, America saw a boost in imports. Those figures have dropped more than 4% since then.

Still, some of last year’s headwinds, might now be turning into tailwinds, David Solomon, chief executive officer at Goldman Sachs, said during a panel at the World Economic Forum in Davos, Switzerland. “Stage 1 of the China deal obviously is a big one.”

The partial trade agreement signed earlier this month has the potential to stimulate corporate investment once again and shift some of the heavy lifting away from consumers.

All in all, despite the variety of headwinds the economy faced last year, “we continue to see economic growth chug along,” said Sarah House, senior economist at Wells Fargo. “Consumers are still in pretty good shape.”