Healthy Economic Data Helps KRW Resist Early Risk-Off Pressure

Spot USD/KRW has been rangebound at the start to the week, weathering the risk-off impetus from over the weekend, amid encouraging economic data out of South Korea & the BoK's readiness to stabilise markets.

• South Korean Markit PMI indicated that the manufacturing sector has returned into expansion. The index registered at 51.2 in Oct, reaching the best level in two years, after printing at 49.8 in Sep, confirming the exports-driven economic recovery materialising in South Korea.
• This came after the Trade Ministry reported a wider than expected trade surplus for the month of Oct, even as imports and exports declined. Breakdown data provided interest, as it revealed that daily average shipments still rose 5.6% Y/Y amid a healthy increase in chip exports.
• BoK Gov Lee warned that mkt volatility may rise, depending on the outcome of the U.S. presidential election and amid the difficult coronavirus situation in Europe, adding that officials will watch markets ready to implement stabilisation measures. He added that the BoK will hold a meeting on Nov 4 to take stock of the impact of the U.S. election.
• Local coronavirus case count fell below 100, but it is worth noting that weekends usually see smaller numbers of tests, while potential ramifications of Saturday's Halloween celebrations remain a source of concern.
• Over the weekend, the gov't revamped its three-tier social distancing scheme, replacing it with a five-tier system (levels 1, 1.5, 2, 2.5 and 3). The country will be divided into seven zones, with alert level determined separately for each region.
• The rate last trades little changed at KRW1,134.95. Bears see Oct 27 low of KRW1,125.00 as a key near-term support. Conversely, bulls need a clearance of Oct 13 high of KRW1,151.45 to gain some momentum.
• Focus moves to South Korean CPI data (Tuesday) and BoP current account balance (Thursday). The aforementioned BoK meeting will also provide interest.