The recent weakness in the Korean won....>

KOREAN WON: The recent weakness in the Korean won has not been driven by any

rise in credit default risk or inflation expectations, which have both remained

very stable over the past few weeks. 

- The weakness has been driven by the combination of the escalating threats of a

US-China trade war and the delayed reaction to the divergence in real interest

rate expectations between the two countries. 

- Any positive news on the global trade front would cause USDKRW to edge lower

in the near term as the push higher is losing momentum. However, strong support

exists at its 200DMA currently at around 1,090.66. The path of least resistance

should remain for won weakness as the historical correlation between USDKRW and

risk-adjusted real interest rate differentials between the two countries

continues to suggest the won is ~7% overvalued.