USD/TWD likely to recover technically in coming sessions, says Scotiabank

The Taiwanese dollar has gained from equity inflows due to TWSE index’s attractive estimated dividend yield for coming 12 months. Year-to-date, the Taiwanese dollar has gained 3.75 percent against the U.S. dollar, outperforming other emerging market Asian currencies except the South Korean won with continued equity inflows. Foreign investors have increased their holdings in local main board shares by USD 1.47 billion this year.

On Wednesday, the U.S. Fed officials unanimously voted to keep their benchmark rate unchanged in a range between 0.50 percent and 0.75 percent, while noting that business and consumer confidence have rebounded recently. The U.S. Federal Reserve did not provide a strong and proper hint for the timing of the next move. The Fed does not appear to be in a hurry to hike its rates again, noted Scotiabank in a research report.

DXY Index is expected to trade in a range of 98-104 in the months ahead by taking account of U.S. macro data, Fed comments, statements and minutes and commentary and policies from the Trump administration. The Taiwanese dollar, on Thursday, appreciated around 0.9 percent. The TWD appears quite expensive in terms of NEER and REER. The USD/TWD pair is likely to recover technically in the sessions ahead.

“If the U.S. reports strong January NFP data on Friday, USD/TWD will likely head for 32.0 in the run-up to March FOMC meeting”, added Scotiabank.