CPI Surges, Strong Lead From Tech Equities

1 month USD/KRW reversed sharply lower post the Asia close. After trading close to 1255, we slumped back to 1241, which is around where we closed in NY. We are back sub the 50-day MA at 1248.80. Onshore spot closed at 1252.50 yesterday.

• The early focus is on the CPI data print for May. It came in stronger across the board, with MoM up 0.7% (0.4% expected), and YoY rose 5.4% (5.1% expected) and core printed at 4.1% (3.7% forecast).
• Whilst the BoK and Finance Minister have stated inflation would be above 5% for the next few months, this is still likely to pressure the BoK and increase speculation a 50bps hike will be delivered at the next policy meeting (13th of July).
• Elsewhere, the lead from equities overnight was a strong one, particularly for tech. The SOX rose 3.57%, while the MSCI IT index gained 2.5%. China's Golden Dragon index also rose 4.63% in US trading.
• The Kospi was off by 1% yesterday, but the index should see better traction today. Note offshore investors sold $115mn of local equities yesterday. Week to date net inflows are still positive though at just under $1.1bn.
• Such a backdrop, coupled with Bok rate hike speculation, may see USD/KRW dip further today. Note lows from late May were just ahead of the 1235 level.
• With China and Hong Kong closed today, we could see less liquidity, aprticualrly in the NDF market.