USDKRW is consolidating its recent gains......>

KOREA: USDKRW is consolidating its recent gains above the 1130 level with the

Aug 14 high at 1138.55 the next upside target. Above here would suggest a

potential bull flag breakout targeting a rally to 1160, which would bring the

pair more closely in line with where US-Korea real yield spreads imply. 

- Korean interest rate swaps continue their advance, with the 2-year trading at

2.02% marking the highest level since June. However, the US-Korea 2-year spread

remains at 105.4bps and with Korean breakevens rising faster than the US, real

yield pressures remain in the USD's favour. 

- A Dong-a Ilbo newspaper report that North Korean leader Kim Jong Un offered

allowing inspectors in dismantling missile engine test site and Yongbyon nuclear

facilities in return for end of war declaration has failed to impact the cross.