USD/KRW Spot Back Near 1380 As Yen Gains Offset Equity Slump, Q2 GDP Out Soon

Spot USD/KRW finished up near 1380 in extended trade for Wednesday, while the 1 month NDF finished NY trade near 1380.5. Spot won gained nearly 0.45%, its third straight session of gains. Positive spill over from the continued sharp pull back in USD/JPY aided the won and offset a sharp pull back in global equity sentiment (led by the tech side).

• In US trade the SOX fell 5.41% Wednesday, the MSCI IT index dipped 3.89%, amid earnings concerns and rotation into small caps. This is likely to weigh on local equity trends today. To recap, the Kospi fell 0.56% yesterday, while offshore investors sold -$215.6mn of local shares.
• Locally today we also have quite a few Q2 earning reports, including SK Hynix, Hyundai and LG Electronics.
• The sharp fall in USD/JPY is helping provide an offset to the weaker global tech equity trends. Correlations between USD/KRW and USD/JPY are running at around 30% since the start of the year (based off daily percent changes). For USD/CNH the equivalent correlations are closer to 60%.
• Coming up shortly we have South Korean Q2 GDP. The market expects a close to flat outcome (0.1% q/q), versus a prior 1.3% read. This would take the y/y pace to 3.3% from 2.5% prior.
• Earlier data showed cooling manufacturing sentiment for August. The headline reading ticking down to 72 from 75 in July. Non-manufacturing edged higher though to 72 from 70 prior.