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Taiwan Dollar: Mildly hawkish CBC but flows drive
Developing
In Short: Taiwan's CBC kept its policy rate unchanged but raised growth and inflation forecasts, signaling sticky services inflation.
Taiwan's Central Bank of China (CBC) maintained its policy rate at 2% for the tenth consecutive quarter, adopting a mildly hawkish tone in its latest monetary policy statement.
The CBC sharply raised its 2026 growth forecast to 11.48% and lifted inflation projections, noting that services inflation remains sticky.
However, the CBC did not signal an imminent rate hike, suggesting that near-term direction for the USD/TWD will be more influenced by foreign equity flows, tech sentiment, and the broader USD move.
OCBC strategist Christopher Wong noted that while the CBC's comments may offer some policy support at the margin, the near-term direction of the currency will still be driven more by foreign equity flows and the broader USD move.
AUD/USD trades with a positive bias, holding above 0.7100 in the Asian session on Friday, supported by softer US bond yields and hawkish RBA Governor Bullock's comments, although geopolitical uncertainties and the Fed's hawkish outlook limit USD losses.
What's still developing
- The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.
Sources
- FXStreetlink