Won Ignores Geopolitical Jitters, Jobs Report Details Reveal Some Positives

South Korean headlines have been dominated by the missile test conducted by North Korea earlier this week, as Pyongyang said it successfully fired a hypersonic projectile, which was personally supervised by Supreme Leader Kim Jong-un. Separately, December saw South Korea's unemployment rate jump more than forecast, fresh data showed. Nonetheless, spot USD/KRW has traded on the back foot, owing to overnight USD weakness underpinned by calculations regarding the expected Fed tightening path.

• It should be stressed that the labour market report was a mixed bag, as the headline jobless rate came along solid underlying numbers. Although the unemployment rate shot to 3.8% from 3.1% (median est. was 3.2%), the economy added the most jobs since 2014 and the participation rate rose to 63.4% from 62.8%, indicating that the recovery of the jobs market is clearly under way.
• The main point of note in South Korea going forward is provided by the upcoming monetary policy decision from the BoK, when policymakers will have the opportunity to discuss labour market dynamics. Most analysts surveyed by Bloomberg expect a 25bp hike to the benchmark policy rate, albeit a sizeable minority have projected no change this time.
• Spot USD/KRW changes hands -4.50 figs at KRW1,190.35 at typing, with bears looking at the ascending 50-DMA, which intersects at KRW1,185.91. A break here would expose the 100-DMA at KRW1,180.39. On the flip side, bulls set their sights on Jan 7 high of KRW1,203.90.
• USD/KRW 1-month NDF last seen at KRW1,191.10, marginally above neutral levels. Bulls see Jan 6 high of KRW1,207.50 as their initial target, while bears keep an eye on the 50-DMA at KRW1,187.32.