Back Above 28.00

USD/TWD gapped higher at the open, the pair pressured by higher greenback in the wake of CPI data. The pair has since trended lower, but is still in positive territory, last at 28.015, up 0.024, off session highs at 28.10. The pair fell yesterday in a supportive risk environment, and also benefitted from foreign inflows into the Taiex as technology stocks found favour. The Taeix could be supported today by reports that Apple is looking to increase iphone production up to 20% in 2021.

• Elsewhere, Japan poured fuel on the geopolitical fire by including Taiwan in its official national security strategy, which drew the ire of China's Foreign Ministry. Tokyo released an annual white paper on the "Defence of Japan," noting for the first time that "the stability of the situation around Taiwan is important, not only for the security of our country, but for the stability of the international community." This comes after Dep PM Aso's comment last month that the U.S. and Japan would have to defend the self-governing island if it was invaded.
• On the coronavirus front Taiwan reported 29 new cases of COVID-19 on Tuesday. A Taiwanese envoy to Germany has called the decision by BioNtech to grant a Chinese company, Shanghai Fosun Pharmaceutical, exclusive rights to distribute its vaccines in Taiwan. Shieh Jhy-wey said "I have told the Germans that using the concept of the 'Greater China region' in life-critical vaccine procurement is ridiculous, especially when China is targeting Taiwan with over 1,000 missiles, and threatens Taiwanese with incursions of warplanes and warships".