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TWD: USD/TWD Spot Uptrend Amid Equity Outflows, CBC Seen On Hold Later

TWD
EM BulletBulletAPACTaiwanEmerging Market News

Spot USD/TWD is hold above 33.00 in latest dealings. The pair is off recent highs (33.05) but still appears to be in an uptrend. All key EMAs are trending higher, with the 20-day at 32.92, the 50-day at 32.83 (which has been important support point in recent months). 

  • Like the won, TWD has lagged, broader USD softness in March to date. Taiwan equities have stabilized but strong offshore outflows persist from local markets. March to date has seen over $10bn in outflows, with 1.1bn in outflows in this week to date. Stability on this front may be needed before TWD follows broader USD shifts more closely. The chart below plots USD/TWD, with net offshore equity flows on a rolling monthly basis, which are inverted on the chart (the orange line).
  • Later we have the CBC decision. All of the sell side economists surveyed by BBG expect rates to be held steady at 2%. The central bank governor stated that if inflation fell sub 1.5% (currently 1.58%) we could see an easing. Still we have higher utility price risks, which the CBC may wish to monitor, whilst growth momentum appears to be holding up ok.
  • Also out later is Feb export orders. The market is expecting a strong rebound to 24.3%y/y, from -3.0% in Jan. Part of this may reflect orders coming in ahead of US tariff announcements.  

Fig 1: USD/TWD Spot & Rolling Monthly Offshore Equity Net Flows

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Spot USD/TWD is hold above 33.00 in latest dealings. The pair is off recent highs (33.05) but still appears to be in an uptrend. All key EMAs are trending higher, with the 20-day at 32.92, the 50-day at 32.83 (which has been important support point in recent months). 

  • Like the won, TWD has lagged, broader USD softness in March to date. Taiwan equities have stabilized but strong offshore outflows persist from local markets. March to date has seen over $10bn in outflows, with 1.1bn in outflows in this week to date. Stability on this front may be needed before TWD follows broader USD shifts more closely. The chart below plots USD/TWD, with net offshore equity flows on a rolling monthly basis, which are inverted on the chart (the orange line).
  • Later we have the CBC decision. All of the sell side economists surveyed by BBG expect rates to be held steady at 2%. The central bank governor stated that if inflation fell sub 1.5% (currently 1.58%) we could see an easing. Still we have higher utility price risks, which the CBC may wish to monitor, whilst growth momentum appears to be holding up ok.
  • Also out later is Feb export orders. The market is expecting a strong rebound to 24.3%y/y, from -3.0% in Jan. Part of this may reflect orders coming in ahead of US tariff announcements.  

Fig 1: USD/TWD Spot & Rolling Monthly Offshore Equity Net Flows

Keep reading...Show less