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USDKRW appears to be tracing out a............>

KOREA
KOREA: USDKRW appears to be tracing out a potential head-and-shoulders
formation, with neckline support coming in at 1115.0, from 1117.1 currently. A
break below here would target a move to 1100.0 in the first instance and then
potentially the gap left at 1086.0.
- Won strength is coming in spite of the widening yield differential between
Korea and the US, with the US-Korea 2-year swap spread now at 94bps amid the
ongoing drop in Korean rate expectations. The Korean 2-year is trading at
three-week lows of 1.9250 as markets price out the prospect of more than one
rate hike by the BOK over the coming years. 
- While the technical outlook for the won looks bullish short-term, supported by
the yuan's recovery, the widening rate gap with the US is fundamentally bearish
and based on historical correlations suggests that USDKRW should be trading ~7%
higher. 

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