USDKRW has moved lower on hopes of.......>

KOREAN WON: USDKRW has moved lower on hopes of reduced tensions between the US

and North Korea. This has outweighed the impact of a decline in interest rate

expectations resulting from the relatively weak Q4, F GDP results, which saw the

Y/Y reading miss preliminary est., with the Q/Q in line at -0.2%. 

- Technically, USDKRW is trading in an increasingly tight range with 1080 acting

as resistance and 1060 acting as support. A break of either of these levels

would likely determine the next few weeks of price action, while a break below

support would set up a move to the 2014 lows close to 1000. 

- The yen is on the back foot as US stock index futures have edged higher,

allowing the KRWJPY cross to rebound in early Asia dealing. Moving forwards,

factors such as significantly higher real interest rates in Korea should support

KRWJPY, with further falls in US stocks presenting the greatest risk to this

view.