Halister News

(Bloomberg) -- USD/TWD 1-mo. NDFs could test resistance at 32.861, May 18 high, near-term if Taiwan’s central bank decides to cut rates because of slowing economy and Brexit spillover, Bloomberg strategist David Finnerty writes.

• Initial resistance at 32.548, 100-DMA, followed by 200-DMA at 32.734; spot now at 32.360
• Slow stochastics are bullish with %D reading of 51 and rising
• CBC has cut discount rate by 12.5 bps at each of its last three quarterly meetings; next meeting is June 30
  • NOTE: 22 of 27 economists in Bloomberg survey expect CBC to cut rate to 1.375%, two forecast cut to 1.25%, three expect it to hold at 1.50%
• Since March meeting, Taiwan’s economy has continued to slow:
  • Exports fell y/y in May for 16th consecutive month
  • 1Q GDP was -0.68% y/y, contracting for third quarter in row
  • CPI has risen at slower pace over past three months
• Higher USD/TWD should be supportive of export growth and aid local economy; USD/TWD at 32.435
• Central bank in South Korea, an export competitor, cut its interest rates at last meeting; BOK Governor Lee on June 27 said negative impact from Brexit is inevitable