1 Month USD/KRW Tests Resistance Around 1315

1 month USD/KRW spent most of the post Asia close gravitating higher, in line with broader USD strength, particularly USD/CNH. We got close to 1315, which is around highs from early August/late July. We ended the NY session around the 1313 level. Solid support looks evident at the 50-day MA, which comes in at 1299.72. Note onshore markets re-open today, on Friday onshore spot closed at 1302.45, so there will be some early catch up today.

• The lead from offshore equities is positive, with US markets posting modest gain. On the tech front, the SOX and MSCI IT index also rose, maintaining positive momentum from late last week.
• This backdrop is set against China's weaker data outcomes yesterday, which will weigh on the regional outlook, all else equal. Net equity inflows into Korean markets slowed last week, although remained positive ($120mn).
• The domestic data calendar is empty today, but the focus could be on geopolitics with the US and South Korea kicking off preliminary military drills ahead of a large exercise next week (22nd August to 1 September). Both countries, along with Japan, also conducted a joint missile defence exercise in Hawaii.
• North Korea's reaction/response will be a potential focus point for markets, although rhetoric this year hasn't moved market sentiment a great deal.
• If 1 month USD/KRW breaks above 1315/1316 the next upside target will be above 1320, while mid-July cyclical highs coming in just under 1330. Such a move is likely to create intervention/jaw boning risks from the authorities though.