KRWJPY is testing support at its range...>

KOREAN WON: KRWJPY is testing support at its range lows as USDJPY trades at the

112 level. A break below 9.80 in KRWJPY would mark a bearish break below the

recent range as well as uptrend support from the Aug lows.

- Real bond yield spreads between Korea and Japan have been pointing to a large

downside move for several months as the nominal yield spread has narrowed even

as inflation expectations have risen faster in Korea.

- While any recovery in risk appetite would likely trigger a bounce in KRWJPY,

it would take a significant shift higher in Korean rates to justify an uptrend

in the pair given historical correlations.