Spot USD/KRW Tests 100-day EMA Support, July Trade Figures Due Soon

Spot USD/KRW slumped to the 100-day EMA support point (1367.8) in extended Wednesday trade. We finished up at 1371.2, still a won gain of nearly 1%. Sub 1370 levels were last seen in the first half of June. The 1 month NDF rose 1.1% in won terms (finishing the NY session on Wednesday at 1366.74). Sentiment was buoyed by surging tech equities and broader USD softness.

• Some spillover from stronger yen levels (which was the top G10 performer) likely aided the won. In the equity space, the SOX surged 7% in US trade, while the MSCI IT rose nearly 4%.
• Softer US yields, the real 10yr is back to 1.85%, levels last seen in mid March, with Fed Chair Powell comments around a rate cut being on the table in September helping drive these moves.
• Risk aversion ticked up amid Middle East geopolitical concerns, but there isn't much carry over for this so far today. US equity futures are heading higher, aided by META results, which is providing a positive equity set up for the region, including the Kospi. An offset may come from potential US curbs to China chip access, which could impact local chip makers (see this BBG link).
• To recap, the Kospi rose 1.19% yesterday, while offshore investors added $65.6mn to local stocks.
• Coming up on the data front we have the July trade balance, with exports expected at +18.4% y/y (from 5.1% prior). The trade surplus is forecast down slightly to $5000mn, from $7991mn in June.