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(MNI Australia) USD/TWD spot has fallen another 0.70% so far today. This brings spot back to 29.70/75, there was some support evident around the 29.66 level. This brings spot TWD gains since markets re-opened at the start of the week close to 1.4%. This is comfortably the best performer in EM Asia FX, with PHP next best at 0.90% over the same period. The 1 month NDF sits slightly higher versus NY closing levels, last at 29.54, but this pair has formed a death cross (50-day MA falling below 200-day MA).

  • The better equity tone, particularly in the tech space, continues to aid TWD. The chart below plots weekly net equity flows (inverted on the chart), against spot USD/TWD. For the first 3 sessions of this week, we have seen $3.14bn of fresh inflows. If positive momentum continues for today's session and tomorrow, this is likely to be the strongest weekly flow period going back to late 2005.
  • Outside the equity space, some signs of thawing tensions with China are also likely helping at the margin. China's latest proposal is to resume direct flights between the two countries. This comes after China resumed some exports of previously banned Taiwan products.
  • Still tensions can ratchet higher again, with potential visits from US officials still in focus.

Fig 1: USD/TWD & Weekly Net Foreign Equity Flows

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(MNI Australia) USD/TWD spot has fallen another 0.70% so far today. This brings spot back to 29.70/75, there was some support evident around the 29.66 level. This brings spot TWD gains since markets re-opened at the start of the week close to 1.4%. This is comfortably the best performer in EM Asia FX, with PHP next best at 0.90% over the same period. The 1 month NDF sits slightly higher versus NY closing levels, last at 29.54, but this pair has formed a death cross (50-day MA falling below 200-day MA).

  • The better equity tone, particularly in the tech space, continues to aid TWD. The chart below plots weekly net equity flows (inverted on the chart), against spot USD/TWD. For the first 3 sessions of this week, we have seen $3.14bn of fresh inflows. If positive momentum continues for today's session and tomorrow, this is likely to be the strongest weekly flow period going back to late 2005.
  • Outside the equity space, some signs of thawing tensions with China are also likely helping at the margin. China's latest proposal is to resume direct flights between the two countries. This comes after China resumed some exports of previously banned Taiwan products.
  • Still tensions can ratchet higher again, with potential visits from US officials still in focus.

Fig 1: USD/TWD & Weekly Net Foreign Equity Flows

Keep reading...Show less