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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TWD
USD/TWD sits in the 32.75/80 region. We are slightly down from recent highs (32.92), but the pair is lagging the USD sell off against the other North Asia currencies. We tested the 20-EMA earlier near 32.70, while further south is the 50-day around 32.52.
- The chart below plots the USD/TWD against USD/JPY, USD/KRW and USD/CNY since the start of the year (all indexed to 100.00).
- USD/TWD had a much more modest run up than USD/JPY into the first half of July, so seeing less downside as USD/JPY rolls over is not surprising for TWD. Still, USD/TWD has mirrored USD/KRW fairly closely in 2024, but hasn't seen much downside with the recent USD sell off.
- The same also applies for USD/CNY, albeit with lower magnitude moves.
- Taiwan equities are strongly firmer, up nearly 2% today, albeit still off recent highs. Last month saw just over $11.5bn in net equity outflows from offshore investors. This was the largest since early 2020 and the onset of the Covid pandemic.
- The tech equity outlook is uncertain given concerns around valuations, trade tensions and potential rotation into different sectors that may benefit from easier Fed policy.
- Still, even some slowing in terms of outflow momentum may alleviate pressures on TWD.
- Data this week has been positive. Late yesterday Q2 GDP rose 5.09%y/y, versus 4.80% forecast. The Monitoring Indicator, released on Monday, showed a healthy economy. The July PMI eased but remains close to recent highs.
- A healthy domestic backdrop should also help the local currency at the margins. Still, an offset comes from unattractive carry, implied rates sit at 1.35% for 3 month horizon.
Fig 1: North Asia USD Trends In 2024, TWD Lagging Recent USD Weakness
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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