USD/TWD Consolidating Above 32.00, Amid Strong Equity Outflows

USD/TWD looks to be consolidating gains above the 32.00 level. The pair was last near 32.04, which is fresh highs back to early November last year. Highs last year came in close to the 32.35 level. The 20-day EMA sits back near 31.86.

• Taiwan equities are modestly tracking lower, down 0.20% so far today, with China looking to expand its iPhone ban in the government sector weighing on Apple suppliers, including TSMC. SocGen favors South Korean shares over Taiwan equities in the NEA space, citing valuations limiting Taiwan upside.
• Offshore investors remain net sellers of local equities, with already nearly $1.1bn in outflows in September to date. For the quarter to date, we are running at -$8.63bn in net outflows.
• BofA is bearish TWD, expecting more local outflows to bond ETFs, given the US yield premium over Taiwan, whilst also expected Life Insurance companies to structurally reduce their FX-hedging ratio, which is also a TWD headwind.
• Coming up later is August trade data. Exports are expected to improve modestly to -8.6% y/y (prior -10.4%). Imports are projected at -17.8% y/y (prior -20.9%).