USDKRW is consolidating following a......>

KOREAN WON: USDKRW is consolidating following a large break through both its

200DMA and its February high last week, breaking above 11,00 to trade at 1,109

currently. The sharp move higher was not driven by any particular news event and

occurred even as US-Korean interest rate spreads remained relatively unchanged. 

- The weakness appears to have been a delayed reaction to the major misalignment

between USDKRW and risk-adjusted real yield spreads. MNI has been highlighting

the potential for a large move lower in the won over the past two months, most

recently in 'Tactical Korean Won Weakness Has Further To Run'(for full story see

mainwire May 23, 08.36 GMT). 

- Even after the won's 3% weekly loss though, the USDKRW remains roughly 7%

below 'fair value' based on risk-adjusted real yield spreads and so further

upside is likely, particularly as no major resistance exists until 1,150 given

the break of the 200DMA.