Markets Look Ahead To Rate Announcement

A dovish FOMC and subsequent weakness in the greenback will provide some food for thought for the Taiwan Central Bank (CBC) at its meeting today. USD/TWD is lower today, last at 28.266 after touching 28.234 yesterday.

• Markets look ahead to the Taiwan Central Bank rate announcement expected after 0830GMT/1630HKT today; full MNI preview here. The bank is expected to keep rates on hold, key rate currently 1.125%, while markets will be looking for a response to Taiwan potentially being branded currency manipulators by the US due to its intervention in FX markets. The central bank "smoothes" the rate into the close to defend the 28.00 handle.
• The bank seems to have eased up on intervention since being put on the manipulator watchlist by the US Treasury. TWD's percentage move in the last hour of trading have been close to zero for the for seven days, eschewing the usual price swings. However, the USD has enjoyed a rally during the period and been organically above 28.00, it will be interesting to see how the central bank responds when the rate drops.
• Elsewhere, China said today that it would not compromise with US over sovereignty, a response to warnings from the US over Taiwan. Markets will await comments from the US-China summit in Alaska today.