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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
KRW
Still, for USD/KRW the market may be happy to fade upticks in the pair. This morning's first 20-days August trade data pointed to a resilient export growth backdrop. The chart below highlights that there remains a reasonable wedge between rolling KRW/USD y/y changes and the improved export backdrop (with the latest print +18.5%y/y for exports, the outcome for the first 20days of the month, used in the chart). If USD/KRW holds at current levels into end August, some of this wedge will be closed though.
- The BoK is likely to hold rates tomorrow, another marginal won positive.
- Broader trends are likely to be dictated by how dovish the Fed is through the second half of this year relative to current market pricing.
- A soft landing scenario should also be supportive of global equity trends, which should see greater offshore inflows return to South Korean stocks. A won positive all else equal.
- Structural domestic outflows are a won headwind, but such outflows may moderate with a Fed easing cycle.
Fig 1: Won Gains Still Lagging Improved Exports
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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