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AUSSIE 3-YEAR TECHS

(Z1) Neutral at Higher Levels

AUSSIE BONDS

Flatter

RATINGS

Italy Upgraded At Fitch, Affirmations Elsewhere

ASIA

Coming up in the Asia-Pac session on Monday:

MNI

Coming up in the Asia-Pac session on Monday:

USDCAD TECHS

Heading North

KOREAN WON
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.