U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
US Gas Market Poised for Supercycle: Bernstein Analysts 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Stock Futures Dip as Investors Await Key Payrolls Data 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
Wall Street Analysts Weigh in on Latest NFP Data 
2025 Market Outlook: Key January Events to Watch 
China's Refining Industry Faces Major Shakeup Amid Challenges 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
The TWD has had a good run so far this year, and with the largest current account surplus in emerging markets, it will require a negative exogenous event – China growth or a wobble in global sentiment that drags down equities – for it to weaken meaningfully.
With Chinese growth concerns to surface around year end, and coupled with negative carry and strong performance so far this year, risk-reward favours long dollar exposure or using TWD as a funding currency against regional peers. The CBC is likely to tolerate only so much currency strength, especially when growth dynamics start to worsen.
Key drivers: Performance of domestic equities (and associated flows) has taken over from interest rate differentials as the main factor impacting the TWD.
Risks: A longer period of stability in Chinese growth will keep the TWD stronger than we expect. A contused upward march in global and domestic equities would also be positive. A weaker TWD would result from CNH depreciation or a very intense Chinese growth slowdown
Hedge against carry trades and a EUR reversal: We remain constructive on EM high yield currencies but prefer to short low yielders, such as the TWD when entry levels are attractive (currently near the bottom of the cyclical range).
A near term catalyst for a wobble in EM currencies could come from a short-term retracement in EUR, which is expensive compared to real rate differentials and where spec positioning is at seven year highs.
North Asia most susceptible to earlier re-rating of growth expectations: In the event Chinese growth - or even US growth - slows earlier than we expect, the growth-sensitive North Asian currencies should be hit the hardest.
Spot and vol parameters line up: USDTWD has failed to close below 30 (intra-day low of 30.12) and CBC intervention should limit the downside, while volatility and skew are low. We find having a downside knock-out to cheapen a USDTWD call is attractive.
