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Free AccessFirmer Equities Keeps USD/KRW Close To Recent Lows
The won spent most of the post Asia close on the front foot, although once again the 1 month NDF couldn't sustain moves sub the 1300 level. We finished the NY session just above 1301, while onshore spot closed on Friday at 1302.45. The 50-day MA in the 1 month NDF comes in at 1297.38, so this could be a level to watch on the downside this week. On the topside moves towards 1310 should draw selling interest.
- The continued rally in global equities continues to benefit the won, although as we noted last Friday there remains a disconnect with the performance of the currency and onshore equities.
- Tech sentiment continues to improve, the technical picture for the MSCI IT index remains constructive, while the SOX still managed a rise last week and is back close to recent highs.
- To recap, the Kospi edged up by 0.16% on Friday (Kosdaq fell by 0.06%), while offshore investors sold a modest $4.7mn in local shares. Weekly net inflows were still positive at $120.7mn, but this is down from recent weeks.
- The domestic data calendar is quiet this week, with only Q2 short-term external debt (out on Thursday).
- Over the weekend the South Korea Finance Minister Choo Kyung-Ho stated the government will significantly cut expenditure next year. This follows 10yrs of expansion in fiscal spending. The Finance Minister also stated government bond issuance will drop as well, but didn't give figures.
- Choo also stated he believes inflation is nearing a peak of around 6%. He doesn't think inflation will reach 7%, as some are forecasting. To get to this level is likely to require another adverse shock.
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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.