Tensions Heightened On Korean Peninsula, Arms Race Picks Up Steam

Spot USD/KRW reopened on a softer footing, taking a hit from Wednesday's greenback weakness, despite intensifying arms race on the Korean peninsula. The rate last trades -3.15 figs at KRW1,167.30, with bears looking for further losses past the 50-DMA at KRW1,157.78 towards Sep 6 low of KRW1,154.00. Bulls look for a rally above Sep 13 high of KRW1,176.95, which would expose Aug 20 high of KRW1,181.00.

• USD/KRW 1-month NDF last seen at KRW1,167.90, around 1 fig higher on the day. Bulls look to take out Sep 13 high of KRW1,177.82, while bears keep an eye on the 50-DMA at KRW1,158.19.
• Geopolitical tension surrounding North Korea's latest missile tests continues to simmer. The DPRK fired two projectiles yesterday, which landed within Japan's EZZ. Its state media confirmed that Pyongyang held a military drill, which involved test-firing railway-borne missiles into the East Sea. Hours after that drill, South Korea conducted its first successful underwater test-launch of ballistic missiles from a submarine. The successful tests show that Pyongyang and Seoul have added new missile delivery systems to their arsenals.
• Hong Joo-pyo, the 2022 presidential candidate for the main opposition People Power Party, said that the U.S. "is approaching North Korea in a naive way" and should allow South Korea to develop its own nuclear strike capacity, as "nukes can only be countered with nukes".