TAIWAN: TWD Hits New Multi-Week High Offshore as CB Strike FX Agreement with US
TWD forward outrights hold close to the entirety of the bid on the agreement struck between the US Treasury and the Taiwan Central Bank, adding to the post-market gains offshore which should be reflected at the open next week. The 1-month offshore TWD outright briefly hit 30.304 at the low, lowest since late September.
- The agreement, and vow, to avoid manipulating exchange rates and disclose FX intervention and - importantly - prevent "public investment vehicles such as pension funds" from investing abroad for the purposes of targeting the FX rates.
- Importantly, the headlines have also favoured KRW, helping trigger a new session low in the USDKRW 1m outright, and building on gains triggered by the South Korean finance minister's plans to stabilise the FX rate via measures including the National Pension Service.
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NORWAY: Norges Bank FX Purchases Set To Increase From Next Year
Based on the details of Norway’s 2026 budget proposal, analysts expect Norges Bank daily NOK purchases to increase from next year. Early estimates we have seen range from NOK600-800mln/day, up from NOK276mln at present. These figures will be refined once budget negotiations conclude, likely in December.
JP Morgan:
- “The deficit is [presumably] larger than Norges Bank’s assumption, suggesting a marginal hawkish impact.”....“The fiscal impulse is estimated at 0.4%, while a separate estimate of fiscal thrust is just 0.1%”…“The latter estimate tends, however, to under-estimate the actual impact. We expect 2026 fiscal thrust at 0.5%”
- “We estimate that the Budget, in isolation, indicates net NOK purchases of 0.67bn/day, on average, in 2026. On top of the projections from the Budget, Norges Bank’s profit transfer to the oil fund needs to be taken into account ….Assuming profits amount to roughly the same as in 2025, this gives total NOK buying of ~0.8bn/day….For the remainder of 2025, we see upside risk to the current pace of 0.276bn/day NOK buying.”
- “Bear in mind that increased NOK purchases by Norges Bank does not imply that total net NOK demand increases in the market. The reason is that prior to Norges Bank’s NOK purchases the private petroleum companies convert taxes—which are in foreign currencies —to NOK. These taxes, which are much larger in size, are now expected to decline compared to 2025”
SEB:
- “The budget underscores the general notion that fiscal demand impulses will ease, but overall spending is broadly in line with Norges Bank’s estimate and should thus not impact the monetary policy outlook.”
- “The need for daily NOK purchases will increase in 2026. On the one hand, the non-oil budget deficit will decrease by NOK 35bn to 452bn, but on the other hand the fall in NOK-denominated petroleum income will be larger. Our first take given the budget translates into NOK purchases of around 600-650mn per day on average.”
- “The budget implies an underlying borrowing need of NOK 96bn, which is broadly stable from 2025. We believe Norges Bank wants to keep supply broadly stable while building up the cash reserve if possible. Hence, we expect a stable borrowing interval of NOK 95-105bn, or possibly NOK 100-100bn. “
SOFR OPTIONS: Mixed Trade Since the Open: Conditional Steepener
- 5,000 3QX5 96.75 calls vs. 3QF6 96.75/97.75 call spds, 4.5 net cr conditional curve steepener
- +15,000 SFRZ5 96.00 puts cab
- +6,000 SFRZ5 96.00 puts, .25 ref 96.375
- -10,000 SFRH6 96.50/96.68/96.87/97.06 call condors, 4.75 ref 96.605
- +2,500 0QZ5 97.50/98.00/98.50 call flys, 2.0
- +2,500 SFRM6 97.00/98.00/99.00 call flys, 11.25
- -5,000 0QZ5 96.50/96.75 2x1 put spds, 1.5
EQUITY TECHS: E-MINI S&P: (Z5) Trend Needle Points North
- RES 4: 6850.87 1.618 proj of the Aug 1 - 15 - 20 price swing
- RES 3: 6831.38 2.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6819.25 1.500 proj of the Aug 1 - 15 - 20 price swing
- RES 1: 6742.50/6812.25 Intraday high / High Sep 9 and bull trigger
- PRICE: 6726.50 @ 14:48 BST Oct 15
- SUP 1: 6605.62 50-day EMA
- SUP 2: 6540.25 Low Oct 10 and a key short-term support
- SUP 3: 6506.50 Low Sep 5
- SUP 4: 6427.00 Low Sep 2
A sharp sell-off in S&P E-Minis last Friday appears corrective - for now. The contract has found support below the 50-day EMA, currently at 6605.62, and the Oct 10 low of 6540.25 has been defined as a key short-term support. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Oct 9 high. A breach of this hurdle would confirm a resumption of the uptrend.
