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Bullish Extension


Heading North


(M1) Needle Still Points North


(N1) Bullish Conditions Remains Intact


Extends Lower With Bears In Charge

Close Below 28.00 Still Elusive


USD/TWD last at 27.994, still below the 28.00 handle intraday but refusing to close below the level amid rumoured CB intervention.

  • Data after the Asia close yesterday showed industrial Production Y/Y at 9.9% vs 6.0% expected. Citi Economics highlighted in their forecast that the earlier December release suggests manufacturing strength has extended beyond typical seasonal year-end demand. Manufacturing resiliency is also observed from the latest PMI (which climbed by another 2.5pt to 59.4) and two consecutive months of above 30% Y/Y export order growth.
  • Money supply data was also released. The M1B gauge rose 16.17% Y/Y in December, the fastest pace since May 2010 driven by net capital inflows and accelerated expansion in bank loans and investments.
  • Meanwhile car executives are seeking government help in a bid to see if the supply of chips, — that do everything from controlling power steering to anti-lock brakes, can be sped up which could help support the Taiex further as electronics drive export strength.
  • Covid concerns continue to weigh in Taiwan, despite the relatively small number of cases. TSMC has announced tighter measures to stop the spread of the virus after a cluster was discovered at Taoyuan General Hospital.
  • Markets now look to the US and the stance of the Biden administration on its relations with Taiwan and China. The US State Dept issued a statement over the weekend which affirmed its stance towards Taiwan and encouraged a dialogue with Beijing.
  • Forwards have risen from a month ago in longer tenors, while the 1-month forward has declined to 27.919 from 27.958.