Surging Local Equities Does Little To Aid TWD

Spot USD/TWD is little changed in the first part of Monday trade, last near 31.55. The 1 month NDF is at a similar level. Late last week, the 1 month NDF probed above 31.60, which was fresh YTD highs. We haven't seen spot test YTD highs yet, but we aren't too far away.

• TWD weakness comes despite generally strong tech equity sentiment. Also note last week saw positive equity inflow momentum, albeit fairly modest at $567.2mn. Feb to date has seen +$3.67bn in net inflows though.
• An offset is clearly coming from the push out in Fed rate cut timing. Given low levels of yields onshore, sensitivity is likely to US yield developments. The US -TW 2yr swap rate differential is +362bps, not too far off recent highs.
• J.P. Morgan also note that poor FX conversion (from overseas) earnings is another meaningful TWD headwind.
• A clean break above 31.60/65 is likely to see 32.00 targeted in the pair. Late Jan lows rest back at 31.14.
• On the data front, tomorrow delivers Jan export orders.