USDKRW opened above resistance at its Sep.....>

KOREA: USDKRW opened above resistance at its Sep 25 high and while the pair has

edged lower from its opening spike, it remains clear of the 1130 level, which

now acts as support. A potential bull flag is forming suggesting further gains

over the medium term.

- Inflation data released earlier today showed a sharp jump in both headline and

core CPI. Headline CPI jumped 0.7% m/m and 1,9% y/y, its fastest pace since Sep

2017.

- Rate markets have responded positively to the CPI data with the 2-year swap

adding on a further 1.3bps to trade at 2.0080%. Rising yields are providing

little help to the won due to the already large gap in real yields vs the US. 

- The ongoing rise in Korean breakevens, which hit new four-year highs

yesterday, is also undermining Korean real yields, keeping upside pressure on

USDKRW.