TWD: Outperformance Continues, Equity Inflow Momentum Elevated
Spot USD/TWD is testing sub 30.00 in early Wednesday dealings, up close to 0.25% in TWD terms versus end Tuesday levels. This continues the run of recent TWD outperformance. In the past week we are up close to 1%, while in Sep to date, gains are near 2%, only bettered in the EM Asia space by THB at this stage.
- Gains today look to be largely catch up with USD weakness since Tuesday's onshore close. The 1 month USD/TWD is little changed, last near 29.95. The RSI (14) for USD/TWD is lower at 37.3, but not yet in oversold territory.
- A clean break for the pair sub 30.00 could see focus turn to August lows at 29.72. We are still some distance away from early July cycle lows at 28.80. On the topside, the 50-day EMA resistance point is close to 30.17.
- Relentless equity inflows (now up to over $8bn for Sep to date) have helped fuel the TWD rally. The chart below plots rolling monthly equity inflows, which are inverted on the chart, against spot USD/TWD. In recent years we haven't seen monthly stock inflow momentum stretch much beyond current levels.
- So, we may need to see further positive catalysts for fuel further inflow momentum and potential TWD gains. The biggest near term risk is the upcoming Fed meeting.
Fig 1: Spot USD/TWD Versus Rolling Monthly Offshore Equity Inflows (Inverted)
Source: Bloomberg Finance L.P./MNI
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FOREX: JPY Crosses - GBP/JPY Trying To Break Back Above 200
US equities momentum stalled heading into the weekend. This morning US futures opened a little higher, ESU5 +0.15%, NQU5 +0.30%. The JPY crosses look to regain momentum higher, led by GBP/JPY & EUR/JPY.
- EUR/JPY - Friday night range 171.52 - 172.38, Asia is trading around 172.55. This pair found good demand back towards 171.00 at the end of last week and after putting in a higher low is looking to regain momentum to challenge the year's highs.
- GBP/JPY - Friday night 198.92 - 199.69, Asia trades around 199.95. This pair found demand back towards 199.00 to end the week and is looking at testing the highs above 200 again. A sustained move back above 200.00 is needed to generate fresh impetus higher.
- NZD/JPY - Friday night range 86.99 - 87.29, Asia is currently dealing 87.45. The pair found solid demand towards the 87.00 area, price looks comfortable back in the middle of its 96.50-99.00 range
- CNH/JPY - Friday night range 20.4297 - 20.4947, Asia is currently trading around 20.5200. This pair continues to find solid demand back towards its pivotal support between 20.30/20.40. A sustained break back below 2.3000 is needed to turn momentum lower again, until then its looks comfortable in a 20.4000-20.8000 range.
Fig 1 : GBP/JPY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
US: Trump States Zelenskyy Can End War With Russia Immediately If He Wants To
US President Trump has posted on Truth Social that Ukraine President Zelenskyy can end the war with Russia now if he wants to. The full post is re-printed below. This comes ahead of President Trump's meeting with Zelenskyy later today, while some key EU leaders will also be in attendance. Recent Trump/Putin talks will be discussed. Russia is apparently offering to hold its frontlines in Kherson and Zaporizhzhia in exchange for the Donbas. US special envoy Witkoff said that the US/European security guarantee could “effectively offer Article-5 like language” (NATO), as reported by the BBC. Ukraine has to hold a referendum though to agree to changes to its territory.
- Donald J. Trump @realDonaldTrump, "President Zelenskyy of Ukraine can end the war with Russia almost immediately, if he wants to, or he can continue to fight. Remember how it started. No getting back Obama given Crimea (12 years ago, without a shot being fired!), and NO GOING INTO NATO BY UKRAINE. Some things never change!!!."
CNH: USD/CNY Fixing Makes Another YTD Low, Error Term Unchanged
The USD/CNY fix printed at 7.1322, versus a Bloomberg market consensus of 7.1812.
- This is a fresh YTD low for the fixing and continues the recent downtrend in the fixing outcome. The fixing error was little changed at -490pips.
- USD/CNH is down a little so far today, last near 7.1865, with the majors displaying a modest risk on trend, with JPY and CHF underperforming, while AUD and NZD rise modestly.
