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1 month USD/KRW Back Sub 1290 ​​

KRW
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1 month USD/KRW dipped further post the Asia close on Friday. We moved back sub 1290, closing at 1288.80 in NY. Note spot closed onshore on Friday at 1298.40, so expect some catch up to the downside in early trading today.

  • The lead for Korean equities is positive today, with tech shares surging in US trading on Friday. The SOX rose close to 4.45%. The MSCI IT index gained 3.60%.
  • We noted on Friday the won was lagging the equity rebound. The Kospi rose 2.26%, while the Kosdaq surged 5% during Friday’s session. Offshore investors bought $268.6mn of local shares. Net outflows for the week were still close to $1bn though.
  • Whilst the won has played some catch up with equities we could extend further if onshore sentiment remains positive, the chart below is 1 month USD/KRW NDF against the MSCI IT index (note USD/KRW is inverted on the chart).
  • The data calendar is quiet. We are still waiting for May retail sales/department store sales data. Consumer confidence prints tomorrow.
  • Finance Minister Choo Kyung-ho stated in an interview yesterday that inflation may reach 6% in coming months. The Energy Minister will announce at 3pm today local time whether or not power prices will rise, although the Finance Minister stated a rise is inevitable.
  • South Korean President Yoon will meet with US President Biden and Japan Prime Minister Kishida on Wednesday in Spain as part of the NATO summit.

Fig 1: USD/KRW & MSCI IT Performance

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1 month USD/KRW dipped further post the Asia close on Friday. We moved back sub 1290, closing at 1288.80 in NY. Note spot closed onshore on Friday at 1298.40, so expect some catch up to the downside in early trading today.

  • The lead for Korean equities is positive today, with tech shares surging in US trading on Friday. The SOX rose close to 4.45%. The MSCI IT index gained 3.60%.
  • We noted on Friday the won was lagging the equity rebound. The Kospi rose 2.26%, while the Kosdaq surged 5% during Friday’s session. Offshore investors bought $268.6mn of local shares. Net outflows for the week were still close to $1bn though.
  • Whilst the won has played some catch up with equities we could extend further if onshore sentiment remains positive, the chart below is 1 month USD/KRW NDF against the MSCI IT index (note USD/KRW is inverted on the chart).
  • The data calendar is quiet. We are still waiting for May retail sales/department store sales data. Consumer confidence prints tomorrow.
  • Finance Minister Choo Kyung-ho stated in an interview yesterday that inflation may reach 6% in coming months. The Energy Minister will announce at 3pm today local time whether or not power prices will rise, although the Finance Minister stated a rise is inevitable.
  • South Korean President Yoon will meet with US President Biden and Japan Prime Minister Kishida on Wednesday in Spain as part of the NATO summit.

Fig 1: USD/KRW & MSCI IT Performance

Keep reading...Show less