TWD: Offshore Investors Sell Local Shares, But TWD Stabilizes
The 1 month USD/TWD NDF edged back below 30.00 in overnight trading, ending in NY just under 29.97. Note spot closed above 30.00 yesterday, although onshore banks were reportedly selling USDs to curb upside pressure.
- CNH also traded a little firmer, while China's Golden Dragon index ended the NY session higher (albeit with a good degree of volatility). The market though seems to have taken some comfort from China's response to Pelosi's visit to Taiwan.
- At face value measures don’t appear to be significantly increasing tensions. Planned live fire military drills by China, which will take place around Taiwan, will commence tomorrow and will reportedly last for 4 days.
- Developments will obviously be watched closely today though, as Pelosi is scheduled to meet Taiwan President Tsai Ing-Wen at 10:53am today.
- Any further economic announcements will also be watched, after China announced curbs on Taiwan food imports yesterday.
- USD/TWD implied vol has edged lower in the 1 week and 1 month space for USD/TWD, with the 1 week implied just above 7%. The 1 month risk reversal is at recent highs (+1.53), but the rate of ascent has slowed.
- Yesterday onshore equities lost 1.6%, while offshore investors sold $692.5mn in local shares. This is the largest net daily outflow since the end of June.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSTRALIA: ANZ: June Spending Comes Home Strong
ANZ note that their observed spending data was “solid in June. Average daily spending (excluding petrol) in June rose by 1.9% m/m, based on data until 28 June. Consumers flocked to the shops for end-of-financial-year sales, with shopping spending rising 7.7% on the final weekend of June compared to the weekend prior. Department store, furniture and electronics spending were particularly strong. This helped bump up June spending numbers, after a sluggish start to the month.”
AUSSIE BONDS: Futures Hold Gains
Aussie bond futures were more reluctant to pull back from their respective overnight session peaks than their U.S. Tsy counterparts, going out just shy of their respective richest levels ahead of the weekend.
- That leaves YM +13.5 and XM +12.5 shortly after the Sydney open, with little in the way of meaningful weekend news flow to digest (both in terms of wider macro and domestic matters). Bills run 1-21bp richer through the reds, bull flattening.
- Today’s local docket is headlined by hosing finance data, building approvals, ANZ Job Ads and the latest round of Melbourne Institute inflation expectations readings, although participants will be more than aware of the proximity to tomorrow’s RBA decision (50bp hike is the consensus view), which, when coupled with the recent moves in the space, will likely limit any post-data reaction.
- Expect our full RBA preview to hit over the coming hours.
NZD: NZD Up Off The Canvas
NZD/USD recovered from the sub 0.6150 dip, pushing back above 0.6200 into the NY close last week. We have opened with a slightly firmer tone this morning, tracking above 0.6210.
- NZD/USD finished last Friday down just over 2% for the week, as global risk appetite softened on growth/recession fears.
- Still, NZD/USD is around +1% above the sub 0.6150 lows from overnight on Friday.
- AUD/NZD softness is also helping the Kiwi in early trading today, with the pair back sub 1.1000 (last 1.0975). We are down around -0.25% so far in terms of the cross.
- Offshore drivers are likely to remain key for NZD this week. The data calendar has mainly second tier releases. Tomorrow delivers ANZ commodity prices for June and house price data for the same month.
- NZ Prime Minister Jacinda Ardern will be in Australia for the first part of this week, leading a trade delegation to the country.
- This comes after NZ secured a free-trade agreement with the EU, which was announced towards the end of last week. The aim of which is to allow NZ farmers access to EU agricultural markets, with an estimated NZ$1.8bn in annual export revenue growth to the EU likely as a result of the deal.
