Can 1 Month Hold Below 1300? Relations With Japan On The Improve

1 month USD/KRW finished last week just above 1294, lows going back to the 23rd of Feb. The early impetus today in the pair may be to see some modest upside pressure after China's conservative growth target of around 5% was announced yesterday. Note onshore spot ended on Friday at 1301.30.

• On the data front, Feb FX reserves fell to $425.29bn, from $429.97bn, largely on account of the rebound in the USD.
• Feb CPI pressures cooled slightly more than expected, core and headline both coming in at 4.8% y/y. This should ease pressure on the BoK to tighten further, all else equal, although we don't expect it to impact won sentiment.
• The equity lead from offshore markets on Friday was positive, with broad based gains in US markets, although futures are weaker in the first part of trade today.
• Elsewhere, the South Korean Foreign Ministry is expected to announce details of an agreement with Japan for compensation over forced labor victims, according to the local press. There have been signs of improving relations between the two countries with recent months. It is also possible that South Korean President Yoon will visit Japan later this month for a summit with Japan PM Kishida.