Abstract: On Thursday (September 22), the third-quarter board of directors meeting of the Central Bank of Taiwan announced to raise the policy interest rate by half; The rally remains intact and is expected to rise above 34.
Taiwan’s central bank raises interest rates by half a yard to maintain stability, and the economic growth rate in 2022 will be 3.51%
On Thursday (September 22), the Central Bank of Taiwan held its third-quarter board of directors meeting and announced that the entire board of directors unanimously agreed to raise the policy interest rate by half a size (0.125 percentage points) and the NTD deposit reserve ratio by 1 size, the third highest this year. The second rate hike, the cumulative rate hike range is 2 yards. Taiwan’s central bank forecasts economic growth of 3.51% in 2022 and 2.9% in 2023;
According to the latest announcement from the Accounting Office, the annual growth rate of Taiwan’s consumer price index (CPI) fell below 3% to 2.66% in August, ending five consecutive months of exceeding 3%, but still exceeding the inflation warning line for 13 consecutive months2 %. From January to August this year, the annual growth rate of the overall CPI exceeded 3, reaching 3.1%.
Easing inflation in Taiwan helps the central bank not follow the Fed’s aggressive rate hikes.The author reminds that the total rate hike by the Central Bank of Taiwan is only2That’s far behind the 12-yard rate hike by the Federal Reserve so far this year.
In the long run, however, a more dovish monetary policy by Taiwan’s central bank will help stabilize the economy, compared to a sharp rate hike by major central banks. On Thursday (September 22), Taiwan’s unemployment rate fell to 3.67% in August, better than the expected 3.7% and the previous value of 3.68%. If inflation can be brought back below 2% with the central bank raising interest rates slightly, then when Taiwan’s exports are booming, it will help reduce the rush of foreign hot money.
US Federal Reserve “Eagle” superimposes European energySource crisis, the dollar points to the medium term114
Although Taiwan’s fundamentals are not bad, the current direction of USD/NTD still depends on the “face” of the Federal Reserve. On Thursday (September 22), the US Federal Reserve raised interest rates by 3 yards to the fund rate range, which was raised to 3.00%-3.25%, the highest level after the subprime mortgage crisis in 2008. In addition, the Federal Reserve announced that it will continue to accelerate the reduction of the balance sheet to US$95 billion according to the set path, which is in line with market expectations.
It is worth noting that the Federal Reserve has raised interest rates by 3 yards for the third time in a row, but according to the latest released dot plot, compared with more than half of the members in June who did not believe that the end of the rate hike should not exceed 4%, the dot plot in September It shows that the Fed will still have a 125 basis point rate hike this year, and the terminal rate will rise above 4.5%, and it is not expected to cut interest rates before 2024.
Fortunately, Federal Reserve Chairman Jerome Powell said that it is just entering the lowest level of “restrictive”, which refers to exerting meaningful downward pressure on inflation. At the same time, the Fed raised its June forecast of 3.7% unemployment to 3.8% by the end of the year; the unemployment rate will rise to 4.4% in 2023. Indicating that sharp rate hikes will come at the cost of the economic outlook.
Overall, although the Fed did not see a horrific 4-yard rate hike this time around, its hawkish signal still shocked the market, especially its longer-term high rates and its response to economic slowdown signals. “Ignore” statement. The Fed’s terminal rate is 4.55%, with rates rising to 4.3% by the end of 2022, according to Fed swaps.
Bank of America expects the Fed to continue raising interest rates by 3 yards in November, 2 yards in December, and twice before March next year, with a terminal interest rate range of 4.75-5.00%. Benefiting from this, the US dollar index further climbed to a high of 111.79, setting a new high in more than two decades.
The daily chart of the US dollar index:
After the US dollar index further broke through 110.4, it continued to rise, indicating that the US dollar is still in the stage of accelerating upward. The Gann round shows that the next key node of the US dollar is at the 114.0 level in mid-November. It is expected that the US dollar will generally remain strong in the next 1-2 months.
In fact, the strong rise of the dollar index also benefited from the European energy crisis.On Wednesday (September 21) Russian President Vladimir Putin issued a national speechSex TVSpeech, call up 300,000 reservists. In addition, from the 23rd to the 27th this weekend, the four regions of Luhansk, Donetsk, Kherson and Zaporozhye will hold a referendum on joining Russia.
The market is worried that the above events may lead to further fermentation of the European energy crisis, rising risk aversion and the gloomy economic outlook of the euro zone are all conducive to the previous rise of the dollar.
USD/NTD trend: The mid- to long-term uptrend remains intact and is expected to rise above 34
USD/NTD long cycle:
This round of USD/NTD uptrend started in June 2021, and has maintained a strong rise since then. The mid-to-long-term uptrend remains good. The Gann round shows that the next level can be concerned around 34.0.
In addition, the USD/NTD weekly chart RSI shows that it continues to be overbought, suggesting that there is adjustment pressure to move higher. In the short term, we can focus on the 31.7-32.0 regional resistance. If the above regional resistance is effectively broken, the market outlook is expected to further rebound and challenge the 34.0 level. Watch for mid-November.(Billycompose)
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