Won Tracks Recent Ranges, BOK Expected To Hike By 25bps Today

1 month USD/KRW was range bound post the Asia close, probing above 1344 before selling interest emerged. On the downside dips to 1338 were supported. The pair hasn't made fresh highs since the authorities stepped up their rhetoric around one-sided FX moves. The DXY capping out above 109.00 on a number of occasions has also helped. The 1 month ended the NY session around 1340.55, while onshore spot closed yesterday at 1342.25.

• The focus today is very much on the BoK decision. A 25bps hike is widely expected, which would take the policy rate to 2.50%, fresh highs back to mid 2014.
• If such an outcome unfolds, attention is likely to shift to the outlook in terms how high rates will be by year end/early 2023. Current market pricing has the 6 month implied rate at 3.00%.
• Earlier, the PPI printed at 9.2% for July in YoY terms. This was down from a revised 10.0% gain in June. This is a further sign the relentless rise in Korean inflation pressures is moderating somewhat.
• The other focus point will be equity sentiment, which was better in offshore markets overnight, with the VIX edging away from recent highs.
• To recap, the Kospi rose by 0.50% yesterday (the Kosdaq outperformed, up +1.24%). Offshore investors added a further $105.2mn to local equities.