Won Gets Hammered By Deadly Combination Of Factors

The won underperforms in the Asia EM basket, hit by the combination of regional reaction to U.S. CPI beat, China COVID-19 worry, South Korea's trade deficit reported for the first 10 days of the month & North Korea's latest artillery drill.

• U.S. CPI inflation quickened more than forecast in May, data released after Asia hours Friday showed, triggering hawkish Fed repricing.
• Shanghai & Beijing were forced to roll back some of their virus curbs easing as case tallies climbed further.
• South Korea's trade deficit for the first 10 days of June printed at $6bn as exports dropped 12.7% Y/Y on the back of public holidays on June 1 & June 6. Daily average exports rose 14.2% Y/Y.
• The presidential National Security Office held a meeting after North Korea fired artillery shots, presumably from multiple rocket launchers, with speculation rife that Pyongyang could soon conduct a nuclear test.
• Spot USD/KRW shot higher as onshore markets re-opened, it last deals +18.20 figs at KRW1,286.75. Bulls look for a challenge to May 12 high of KRW1,291.45, while bears look for a pullback under the 50-DMA at KRW1,252.05.
• USD/KRW 1-month NDF last +7.60 figs at KRW1,286.64. Topside focus falls on May 12 high of KRW1,292.69, while bears keep an eye on the 50-DMA at KRW1,255.02.
• On the data front, focus moves to monthly unemployment data, due for release on Wednesday.
• Elsewhere, the BoK will publish the minutes from its most recent monetary policy meeting tomorrow.