Won Capitalises On Greenback Weakness, FinMin Choo Sees Inflation Peaking In Oct

Spot USD/KRW dropped as onshore markets re-opened, playing catch-up with greenback weakness seen last Friday and extending into this morning. The U.S. dollar went offered towards the end of last week as data showed that long-term inflation expectations of U.S. consumers fell, while latest rounds of Fedspeak were interpreted as decreasing the odds of a 100bp hike at the next FOMC meeting.

• When this is being typed, spot USD/KRW trades -7.15 figs at KRW1,319.05. A pullback under the 50-DMA/Jun 27 low at KRW1,282.76/1,280.65 would suggest that bears are retaking control. Bulls look for a jump above Jul 15 cyclical high of KRW1,326.65 to confirm that the current uptrend remains intact.
• USD/KRW 1-month NDF last seen at KRW1,318.48, marginally lower on the day. Bears keep an eye on the 50-DMA/Jun 28 low at KRW1,281.33/1,279.75. Bulls eye Jul 15 high of KRW1,329.02 for initial resistance.
• "Unless global oil prices soar higher, I expect our inflation to stay elevated until October before it starts to gradually settle down from there," FinMin Choo told Bloomberg. The minister noted that "in the unlikely case" inflation could reach +7.0% Y/Y, but "it would be very brief." He also played down potential for an imminent recession or economic slowdown.
• Looking ahead, South Korea's trade data for the first 20 days of the month will be published on Thursday.