Industrial Production Beats Expectations But Slows Amid Fourth Wave

The won slightly stronger in early Asia, USD/KRW down 0.60 at 1166.15 after closing at session highs on Monday. For bulls the focus remains the 2021 high at 1181.10, while bears target a 23.6% retracement level at 1157.40.

• Data earlier showed industrial production rose 7.9% Y/Y, above the 7.2% expected by below 11.5% in June. The cyclical leading index printed -0.2 from 0.3% in June. The data is the latest sign that the country's economic recovery momentum slowed amid the fourth wave of the pandemic.
• On the coronavirus front there were 1,372 new cases in the past 24 hours, though authorities warned this was due to fewer tests. Health officials still intend to implement additional guidelines that will go into effect next week, ahead of Chuseok, which runs from Sept. 18-22 this year, when millions travel across the nation to meet families and relatives. New cases are expected to rise back over 2,000 later this week.
• Elsewhere Vice FinMin Lee said that discussions about the Federal Reserve's tapering of asset purchases have had limited impacts on South Korea's financial market, but the country will monitor the situation. He also noted the government will actively tackle problems from financial imbalances that were spurred by ample liquidity and a bubble in asset markets.
• Markets look ahead to the 2022 budget proposal today; yesterday the government said it will begin providing emergency relief funds to people in the bottom 88% income bracket next week in the latest move to help them cope with the fallout from the pandemic as part of the KRW 11tn handout programme. The government also announced yesterday it would set aside KRW 6.3tn to nurture growth industries.