Pulls Back From Cycle Highs

Taiwan dollar is weaker on Wednesday, yesterday's lower close putting an end to a six day winning streak. USD/TWD dropped as low as 27.505 yesterday before rumours of state bank USD buying saw the pair rise while foreign buyers also purchased less TWD assets than earlier this week, the rate last changing hands at 27.645 up 0.014 on the session.

• Data late yesterday showed CPI rose above estimates at 2.36%, while core CPI rose 1.33% also above estimates. This denotes the third so far this year that inflation breached the government's target of 2%. The Directorate General of Budget, Accounting and Statistics (DGBAS) said that core CPI below 2% shows there is not excessive inflationary pressures, and the headline rate is expected to moderate from Q4.
• The trade surplus unexpectedly narrowed, exports rose 26.9% compared to 23.4% consensus, but imports rose 46.3% compared to 30.2% expected. This is the fourteenth straight month that exports have risen driven by solid demand for tech items and raw materials. Looking ahead, the ministry said that although the spread of the Delta variant of the COVID-19 virus is creating uncertainty about the global economy, demand for semiconductors, base metals and plastics is expected to remain solid.