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KRW: USD/KRW Close To 20-day EMA Support, Manufacturing Sentiment Lower

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Spot USD/KRW finished up extended Tuesday trade just under 1397, a won gain of 0.23%. Dips in the pair sub 1395 were supported through the session. The pair isn't too far away from its 20-day EMA downside support point, near 1393. As we have highlighted recently, this has been a solid support zone for the pair going back to early Oct. 

  • With USD/JPY already sub its 20-day EMA, further downside momentum is possible for spot USD/KRW. There is also rhetoric from the authorities around FX/financial market volatility, which may leave the market reluctant to chase USD moves higher on any break back above 1400.
  • Still, the relative monetary policy cycles are quite different between Japan and South Korea. The BoJ is looking to tighten policy further, while the BoK bias in easing mode, although no changes are expected at tomorrow's policy meeting.
  • Earlier data showed manufacturing sentiment for Dec fell to 66 from 71, which doesn't bode well for GDP growth rebound, at least at face value.
  • In the equity space, the SOX fell 1.21% in Tuesday trade, while the MSCI IT index rose 0.57%. Broader US equity sentiment was positive, aided by the cease fire in the Middle East, although oil prices were little changed.
  • We did see equity outflows from local stocks yesterday, with -$196.3mn in outflows. 

Fig 1: USD/KRW Spot Close To 20-day EMA 

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Spot USD/KRW finished up extended Tuesday trade just under 1397, a won gain of 0.23%. Dips in the pair sub 1395 were supported through the session. The pair isn't too far away from its 20-day EMA downside support point, near 1393. As we have highlighted recently, this has been a solid support zone for the pair going back to early Oct. 

  • With USD/JPY already sub its 20-day EMA, further downside momentum is possible for spot USD/KRW. There is also rhetoric from the authorities around FX/financial market volatility, which may leave the market reluctant to chase USD moves higher on any break back above 1400.
  • Still, the relative monetary policy cycles are quite different between Japan and South Korea. The BoJ is looking to tighten policy further, while the BoK bias in easing mode, although no changes are expected at tomorrow's policy meeting.
  • Earlier data showed manufacturing sentiment for Dec fell to 66 from 71, which doesn't bode well for GDP growth rebound, at least at face value.
  • In the equity space, the SOX fell 1.21% in Tuesday trade, while the MSCI IT index rose 0.57%. Broader US equity sentiment was positive, aided by the cease fire in the Middle East, although oil prices were little changed.
  • We did see equity outflows from local stocks yesterday, with -$196.3mn in outflows. 

Fig 1: USD/KRW Spot Close To 20-day EMA 

Keep reading...Show less