Tailwinds Abound

Taiwan dollar is stronger in early trade, USD/TWD lower as the greenback gives back some of its move higher from Friday. TWD is still benefitting from tailwinds after central bank raised its forecasts for economic growth and inflation last week at its on hold interest rate announcement. Elsewhere data on Friday showed that exports remained robust, but the pace slowed slightly from the previous month with export orders up 17.6% in August from 21.4% in July.

• Industrial production is the highlight today, the figure is expected to rise 12.70% Y/Y in August, slower than the 13.93% in July. Goldman Sachs are more pessimistic than consensus: "We expect IP to rise 11% yoy, decelerating from 14.4% yoy in July. This would imply a further yet moderated decline of 1.1% mom sa in July following a sharp 3.0% mom contraction in July – aggregate August revenues of listed tech companies show a sequential decline after seasonal adjustments, and daily electricity spare capacity data indicate moderation in activity in August. Exports remained solid in August, exceeding expectations. However, the growth momentum moderated and the production sub-index of manufacturing PMI, highly correlated with actual IP production, weakened to 62.9 from 66.9 in July although the index level remained at an expansion stage."