Won Rallies On Continued FX Rhetoric, Broader USD Softness

1 month USD/KRW stayed on a downward trajectory post the Asia close on Wednesday. We finished up the NY session just under 1378, a won gain of nearly 0.75%. Broader USD sentiment was softer (BBDXY off 0.35%), amid a pull back in US yields. This aided the won move. Note onshore spot finished up yesterday at 1386.8.

• The first trilateral meeting between US Treasury Secretary Yellen, along with the South Korean and Japan FinMin's highlighted concerns around FX weakness for both South Korea and Japan (see this BBG link).
• This backdrop adds to the recent jaw boning from local officials around the weaker FX trend. A business lobby group also noted late yesterday the weaker won was a headwind for most companies outside of the semiconductor sector and that hedging could be difficult if the won breaches the 1400 level (see this link).
• For the 1 month NDF, we are now around 1.55% off recent highs. The 20-day EMA is still trending higher and sits close to 1360. The 1355/60 region also coincided with recent highs and from Oct last year. This region could be eyed on a further extension lower in the pair.
• In the cross asset space, we saw a decent sell off in the SOX (over 3%) and MSCI IT index (-1.76%) in Wednesday trade. To recap, the Kospi finished down nearly 1% yesterday, while offshore investors sold $141.5mn of local shares.
• The local data calendar is empty until the start of next week.