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USDKRW has dropped from its daily highs but...>

KOREA
KOREA: USDKRW has dropped from its daily highs but remains above
resistance-turned-support at 1120.0 after today's low inflation print for July
and strong trade balance date failed to support the won amid broad-based USD
strength. 
- 2-year interest rate swaps edged lower to 1.9950% in line with the weaker
inflation print, even as breakeven inflation expectations remained unchanged,
putting some downside pressure on real yields. 
- 2-year real yield spreads between Korea and the US are now at a record low
40bps, less than Korea's 5-year CDS. Based on historical correlations between
risk-adjusted real yields and USDKRW, the pair should be trading roughly 5%
higher. 

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