Won Gets Battered After Chuseok Holidays

Spot USD/KRW has surged through a key layer of resistance (Aug 20 cycle high of KRW1,181.10) as onshore South Korean markets reopened after a holiday-elongated weekend. The rate last sits +10.45 figs at KRW1,185.75. It is approaching the 50% retracement of the Mar 19, 2020 - Jan 4, 2021 sell-off at KRW1,188.55 and a break here would please bulls. Conversely, bears look for a pullback under Sep 16 low of KRW1,165.75.

• USD/KRW 1-month NDF last seen at KRW1,186.45, almost 4 figs better off. Bulls look for a clearance of Sep 20 cycle high of KRW1,192.97, while bears keep an eye on Sep 15 low of KRW1,166.35.
• South Korean economic officials have warned that volatility in the financial markets may rise. The BoK said that they will strengthen monitoring over risks surrounding the Evergrande situation. Separately, Vice FinMin Lee noted that the impact from the Fed's MonPol decision is likely to be "limited," pledging that officials will monitor risks such as Evergrande, global inflation, policy trends and the pace of economic recovery.
• Health officials will be on the lookout for any signs of a flare-up in Covid-19 infections following the Chuseok holidays. Yonhap cited an official with Korea Expressway pointing to heavy road congestion as people returned to the capital on the last day of Chuseok, a sign of heightened travel activity during the festive period.
• South Korea's exports rose 22.9% in the first 20 days of the month, slowing from 40.9% recorded in the first 20 days of August, but the pace of growth in daily average shipments was virtually unchanged.
• South Korea will report its August factory-gate inflation on Friday.