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Won Loses Ground Amid Growing North Korea Threat

KRW

Spot USD/KRW re-opened on the back foot amid a dip in U.S. Tsy yields, but has clawed back losses as geopolitical tensions on the Korean peninsula have continued to escalate. The pair changes hands at KRW1,191.30 at typing, just shy of neutral levels. The 50-DMA at KRW1,186.91 limited losses this morning and provides the initial bearish target. A break here would expose the 100-DMA, which intersects at KRW1,181.48. Bulls look for a move through yesterday's peak at KRW1,193.65, which would bring Jan 7 high of KRW1,203.90 into view.

  • USD/KRW 1-month NDF last seen +3.10 figs at KRW1,191.99. Bulls set their sights on Jan 6 high of KRW1,207.50, while bears keep an eye on the 100-DMA/Jan 13 low at KRW1,183.94/1,183.78.
  • North Korea delivered a thinly veiled threat that they could resume tests of intercontinental ballistic missiles (ICBM) and nuclear weapons, ditching a self-imposed moratorium announced before Kim Jong-un's summit with former U.S. Pres Trump. Yonhap later reported that the DPRK appeared to be preparing a military parade in Pyongyang.
  • FinMin Hong noted that the economy faces uncertainty linked to the upsurge in new Covid-19 cases, external risks and fiscal conditions which could undermine the economic recovery.
  • Headlines surrounding South Korea's presidential campaign continue to grab attention, with two main contenders locked in a neck and neck race.

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