TWD: USD/TWD Spot Uptrend Amid Equity Outflows, CBC Seen On Hold Later
Mar-20 03:48
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
Source: MNI - Market News/BBG
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CHINA: Bond Futures See Biggest Decline this Year.
Feb-18 03:43
- China’s 10YR bond future is lower in its largest drop year to date.
- Opening at 108.69 and after early attempts to rally, the 10YR future declined rapidly by -.40 to reach 108.375.
- The move sees the 10YR breach the 50-day EMA of 108.62, with the next key technical level the 100-day EMA of 107.83.
- China’s 2YR bond future is down by -0.11 at 102.36, breaching the 200-day EMA of 102.38 with the contract back to levels last seen in October last year.
- Optimism has showed signs of returning in China’s markets given apparent delays in the implementation of tariffs.
- China’s CSI 300 has had seven days of gains of the last 10 trading days as the news flow appears that this delay gives time for negotiations.
- Tomorrow sees New and Used Home price data released and will provide insight into whether the ongoing measures to return confidence to the sector are continuing.
JGBS AUCTION: 20-Year JGB Auction Results
Feb-18 03:43
The Japanese Ministry of Finance (MOF) sells Y762.9bn 20-Year JGBs:
- Average Yield: 2.028% (prev. 1.983%)
- Average Price: 99.60 (prev. 100.24)
- High Yield: 2.067% (prev. 1.985%)
- Low price: 99.05 (prev. 100.20)
- % Allotted At High Yield: 9.1954% (prev. 60.5416%)
- Bid/Cover: 3.0557x (prev. 3.7891x)
RBA: 25bps Cut As Expected, But Cautious Statement
Feb-18 03:38
The AUD/USD rate is higher as the market digests the RBA statement. AUD/USD is around 0.6360/65 in latest dealings, after being sub 0.6340 prior to the announcement. In the rates space, the OIS curve is flat to 3bps firmer now. For bond futures, ym and xm are -2.
- The statement hints at caution around further cuts, which is driving the market reaction, more details to follow.
