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USD/TWD Downside Limited, Taiwan & South Korean Equity Flows Diverging

TWD

USD/TWD spot sits a little lower, last near 32.61, little changed for the session. The pair remains within striking distance of recent highs (32.69 recorded on July 3). The pair is above all key EMAs, the 20-day near 32.48, is the closest support point. The 1 month NDF is also little changed, last near 32.55. this pair sits more comfortably off earlier July highs (32.77).

  • These trends leave TWD underperforming the generally softer USD/Asia bias elsewhere. Spot KRW is 0.35% stronger for example. However, other North East Asia FX, like the CNY and JPY are seeing less positive trends at this stage.
  • Local equities have moved off their recent highs, while July has seen decent equity outflows from offshore investors (-$2.7bn). South Korea has seen positive inflows in July to date, showing a diverging in the two usually fairly aligned tech related indices.
  • South Korea's value up program may be drawing more support, while TSMC earnings are due Thursday, another important litmus test for Taiwan sentiment.
  • Reported comments (per BBG) by US Presidential candidate Donald Trump, which questioned US defence of Taiwan, have also likely introduced some volatility today.
  • In terms of the data calendar, next Monday we get June export orders.

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