USDKRW is trading flat back at 1220.9....>

KOREAN WON: USDKRW is trading flat back at 1220.9 after recovering some losses

following the weak open. The pair remains within its recent range with no sign

of a major breakout. 

- The won continues to trade closely in line with the Kospi and the USDCNH, both

of which have provided support for the currency is recent days. A break above

2320 in the Kospi would likely trigger fresh gains in stocks and the won. The

21-day rolling correlation between KRW and Kospi sits at 0.42, while the KRW's

correlation with the CNH is even stronger at 0.77.

- The rise in Korean interest rate swaps is providing support to the won, with

the 2-year swap continuing its gains today, rising another 0.5bps to 1.9225%.

The US-Korea 2-year yield spread has narrowed in recent days but remains lofty

at 104.6bps, suggesting that much more rapid rate hike expectations would be

needed to support won strength.