Taiwan Q2 GDP is scheduled to be released on Friday and is expected to bounce back (consensus 0.7%, previous -0.68%) after three-quarters of contraction.

We do not have any trade recommendations in TWD at the moment. The TWD rate and bond market is unlikely to react much to the GDP report, though the bias is for a mild steepening of the very flat curve upon a stronger than expected GDP outcome.

EM currencies continue to show exceptional resilience to disturbances in risk sentiment, shrugging off Brexit, a weak and strong US payroll report, and political upheaval in Turkey.

Flows have been cooperating indicating fundamental support for the EM FX rally, while positioning is only marginally short dollars. These factors offer some protection to a sharp reversal and is consistent with our near-term bullish stance. We like short USDIDR and short MYRUSD along with long INRKRW as ways to play this market backdrop.

Any foreseen event (hawkish Fed, BoJ disappointing, downside China growth surprise, etc) could knock EM off its pedestal and August has been a generally poor month for EM currencies. At the minimum, the risk is that investors reduce exposure heading low liquidity trading conditions.

Elsewhere, USDSGD’s bull swings seem to be intensified as it jumps above 7&21DMA levels but major on broader perspective momentum indicators do not substantiate this upswings.

So, if you expect that USDSGD would tumble towards recent lows of 1.3313 in near future, then the upswings offered by bulls is the right times for shorts in puts with shallow ITM  strikes and shorter expiries.

Well, then here comes the right strategy to tackle these type of swings, “bull put spread” at net credits, buy next month +1% Out of the money -0.5 delta put option. Simultaneously, short 1W (-1%) in the money put with positive theta.