Dovish talk from a Fed official pushed the Taiwan dollar and Taiwan stocks sharply higher, good news for local investors but still hostage to next week's US inflation report.

• Fed governor Christopher Waller said he would back holding rates steady if August inflation comes in acceptable, cooling bets on a hike.
• US bond yields fell and stocks rose, and the Taiwan dollar closed at a one-week high after foreign money flowed back in.
• Taiwan's main index surged nearly 700 points, with foreign investors buying heavily after dumping close to NT$100 billion earlier in the week.
• Taiwan's central bank puts the odds of a September Fed hike at a coin flip, saying the US CPI due on the 11th will decide it.
• Memory and cooling stocks led the rally while AI-linked substrate makers Nan Ya PCB and Unimicron fell hard.

Outlook: Next week's US inflation number will set the direction for both the Fed and the Taiwan dollar, and another hot reading could quickly reverse this week's gains.