USDKRW is consolidating above its........>

KOREAN WON: USDKRW is consolidating above its 100DMA ahead of a likely push to

1,100 from the current level of 1,081 as the monetary policy divergence between

the two countries continues to head in the greenback's favour.

- USDKRW has remained flat over the past 24 hours as the fundamental drivers of

the pair have also remained flat. However, the recent rise in U.S. 2-year yields

relative to Korea, adjusting for long-term breakeven inflation expectations and

default risk, suggests USDKRW should be roughly ~8% higher.

- While the correlation between USDKRW and default risk-adjusted real yields has

broken down over the past 12 months or so, this does not mean that the

fundaments no longer matter, but rather suggests that bearish speculative

sentiment has been temporarily undermining the USD.

- Should resistance at 1,100 give way, we could see USDKRW shoot higher as its

moves back in line with historical drivers, which put 'fair value' at closer to

1,200.