USD/TWD Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows without a clear driver.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with Taiwan's stable economic outlook, affecting the USD's strength.
• Risk/commodities: Oil prices are stable, which typically supports both currencies, but presents no clear directional driver for USD/TWD.
• One macro factor: Optimism surrounding U.S.-China trade talks has boosted the TWD but introduces risk for exporters with USD exposure.
Range:
USD/TWD is expected to drift within its recent stable range, not likely testing extremes.
What could change it:
• Upside risk: A surprising improvement in the U.S. labor market could strengthen the USD significantly.
• Downside risk: Renewed geopolitical tensions involving the U.S. could further weaken the dollar against the TWD.
