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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
KRW
USD/KRW has tracked recent ranges during today's session. We saw an earlier high of above 1316 in terms of onshore spot but have stayed within a 1313/1315 range for the most part.
- The won continues to lag the broader improvement in risk appetite, as reflected in the improvement in local equities, see the chart below.
- The rebound in local equities, which has continued today, suggests USD/KRW should be somewhere roughly closer to 1300.
- Part of this divergence likely reflects higher USD/CNH and USD/JPY levels. Won correlation with both currencies remains fairly high. USD/KRW and USD/CNH sits at over 90% for the past 6 months, while the equivalent correlation with USD/JPY is at similar levels.
- Hence, we may see this divergence between KRW and the Kospi persist in the near term, at least from a levels standpoint and potentially until we have a more definitive USD peak.
- Earlier, the first 20 days export data painted a fairly resilient picture for July, which should lower fears of a sharp slowdown in external growth, although not surprisingly export growth to China remains quite weak. The trade position also remains comfortably in deficit.
- From a longer-term technical standpoint, all major moving averages for USD/KRW continue to trend higher. The 50-day MA, which comes in at 1285, has been a strong support point since mid 2021. Breaks below this level have proven false and represented a buying opportunity in the pair.
Fig 1: USD/KRW & Kospi Performance
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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