USDKRW is back above 1110 as early.......>

KOREAN WON: USDKRW is back above 1110 as early weakness is overcome. A break

above Friday's high at 1114.7 would be needed to return the short-term focus to

the upside, while a close below 1106.9 would provide further downside momentum

opening 1100. 

- The slight drop in the Kospi which adds to Friday's losses is a headwind to

won strength given the tight correlations of late. However, 2-year rates have

risen 1.25bps to 1.9525%, providing some fundamental support. 

- Korea's trade data reflected a slowdown in imports and exports, but also

showed the continued strong surplus that Korea has, which has helped to reduce

Korea's risk profile to the benefit of the won. However, rising real yield

spreads between the US and Korea suggest that the BOK will need to embark on an

aggressive tightening cycle to justify further won gains.