KRW: Spot USD/KRW Above 1340, Equity Sell-Off In Focus

Spot USD/KRW ended extended Tuesday trade near 1342, a won loss of just under 0.30%. Intra-session highs from the session were marked just above 1345. The 1 month NDF ended Tuesday US trade near 1339. Focus today will likely rest on any fresh upside test in the pair. For spot USD/KRW we are close to the 20-day EMA resistance point, which comes in at 1346.4. We haven't been above this resistance point since the first half of August. 

• We should see negative spill over for local equities today. The SOX lost 7.75% in Tuesday trade, while the MSCI IT index fell by 4.14%, underperforming the broader equity losses. Sentiment wasn't aided by weaker than expected US data, with the ISM headline missing expectations, although some of the detail was firmer than the prior read. The slump in oil prices also added to concerns over the global growth backdrop. Brent fell 4.86% for Tuesday's session
• To recap, the Kospi fell 0.61% yesterday, with offshore investors selling -$257.6mn in local shares, resuming the trend towards outflows.
• On the data front we have already had FX reserves for August, which rose to $415.9bn, from $413.5bn in July. Note Q2 GDP revisions print tomorrow, with the market consensus at -0.2%q/q, so unchanged from the initial estimate.
• On the geopolitical front, the US-Japan-South Korea trilateral executive dialogue will be held.
• BoK board member Shin stated that the local housing market is in a bubble. The central bank will wait to see the effectiveness of various measures, but if they are ineffective then Shin stated only monetary policy can be used (see this BBG link).