Geopolitical Jitters Keep TWD Under Pressure

Taiwan dollar is weaker, USD/TWD pushed higher by gains in the greenback while geopolitical jitters are also keeping TWD under pressure. The Taiwanese PM said earlier that Taiwan needs to be on alert to China's military activities which were categorised as over the top. The Biden administration said that it is privately communicating with China over the incursions of Chinese military aircraft into Taiwan's Air Defense Identification Zone. China has responded saying that US comments are "erroneous and irresponsible".

• Markets look ahead to foreign reserves data after market today, CBC Gov Yang spoke last week and touched on Taiwan's status as a currency manipulator, he noted that Taiwan will remain in enhanced bilateral talks with US Treasury. Trade data later in the week will also be watched for clues on the development of the situation, a soaring trade surplus means it is likely to stay on the watchlist when the next report is released. The US refrained from labelling Taiwan a manipulator at its most recent report in April, but the current account surplus has continued to rise since then. Central Bank interventions have been reduced though, TWD is Asia's top performer this year as a result.
• A reminder that late yesterday the CDC reported that the government will ease some Covid curbs for religious activities and national parks from today.