HALISTER1: INSIDE TAIWAN: TWD Falls on Caution Before Fed Meeting, Tension

INSIDE TAIWAN: TWD Falls on Caution Before Fed Meeting, Tension

(Bloomberg) -- USD/TWD bounces back today on caution ahead of Fed meeting, rising geopolitical tension; 10-yr bond yield edges lower on speculation of further rate cut.
  • TWD falls 0.11% today to close at 32.024 vs USD, dropping for first time in four days
  • USD/TWD might have been oversold last week says Christopher Wong, senior FX analyst at Maybank; is bearish on TWD in near term ahead of Fed meeting
    • Fed may release hawkish signals ahead of their next policy meeting; global investors should also remain cautious due to geopolitical tension
    • Sees TWD downside limited to 32.35 vs USD
  • Overseas investors buy NT$14.8b ($462.8m) of local stocks today; Taiex index rises for seventh straight day, closing at 9,008.21, highest since July 2015
  • Yield on 10-yr govt note declines 0.8 bp to 0.6780%
  • Sentiment is stable as local investors, foreign banks are holding govt bonds, says Baker Tu, FX trader at Capital Securities Corporation
    • CBC keeps cutting overnight guiding rate which indicates further easing likely on the way, albeit may only be realized in the medium term
    • Result of 5-yr bond auction this week to improve as mkt expects CBC to cut rate in Sept.; sees yield between 0.5% to 0.51%
  • Yield on 5-yr note rises 1.39 bps to 0.5055%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Baker Tu (Capital Securities Corp)
Christopher Wong (Malayan Banking Bhd)

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