RBA Raises Interest Rates by 25 Basis Points as Inflation Pressures Persist 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
BOJ Holds Interest Rates Steady, Upgrades Growth and Inflation Outlook for Japan 
Fed Confirms Rate Meeting Schedule Despite Severe Winter Storm in Washington D.C. 
MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
U.S. Urges Japan on Monetary Policy as Yen Volatility Raises Market Concerns 
Initiate long in USDTWD at spot reference 31.75 entered via 3m NDF with a stop target of 33.14 (+4.3%) and a stop slightly below the recent low at 30.99 (-2.3%).
The trade horizon would be 3-4 months. With negative forward points, carry in the 3m tenor is positive at 19bp/month.
Risk reward profile: US activity data, China growth, dollar cycle.
The above trade with targets at 33.14 and stop loss at 30.99 carries attractive risk reward ratio of almost 2:1.
Fundamental driving forces of this trade: Weak US data, especially the upcoming unemployment claims on Thursday which is forecasted to rise at 262K from the previous 259K, while retail sales figure is likely to have reduced from the previous 0.0% to -0.1% that causes a significant reduction in fed rate hike probabilities. A period of stabilization of Chinese growth dynamics or additional debt-indices stimulus. Resumption of the dollar sell off would strengthen the TWD.
The base case for an increase in the fed funds rate has strengthened in recent time that boosts dollar strength. Fed chair Janet Yellen had already signalled that at the meeting of central bankers in Jackson Hole in late August. And since then many of her FOMC colleagues have confirmed her view.
