The escalation in U.S.-Iran tensions.....>

KOREAN WON: The escalation in U.S.-Iran tensions has pushed USD/KRW 11.0 fig.

higher thus far, it now operates at KRW1,177.35. Markets have responded with a

broad-based risk-off reaction as Iran launched missiles at an Iraqi base hosting

U.S. troops. The impact on KRW has been magnified by a jump in oil prices as

South Korean economy shows high exposure to crude.

- Renewed topside impetus in USD/KRW emerges after a brief reprieve seen

yesterday, when the rate shed 5.55 fig. on the day.

- The rate has surged through its 50- & 200-DMAs, leaving bulls to target the

61.8% retracement of the Dec 4 - Jan 2 decline/psychological resistance at

KRW1,179.80/1,180.00. Above opens the Dec 12 low of KRW1,185.55, which marks the

upper bound of a yet unfilled gap. Bears look for a pullback below the

KRW1,176.75 200-DMA, which would expose the KRW1,170.00 mark.

- With no more local data releases scheduled for this week, the focus remains on

geopolitics. Risk analysts have speculated that the U.S. killing of a top

Iranian military commander may inspire fear in Pyongyang and facilitate works on

nuclear deterrence capabilities.