Won Weakens Slightly Despite Strong GDP & CPI, USD Weakness

USD/KRW is up 0.50 at 1157.80 in early trade, shrugging off USD weakness seen on Wednesday. The pair moved in a range from 1161.00 to 1155.30 yesterday. Support is seen at 1150.80, the 50-DMA.

• On the coronavirus front there were 1,961 new cases in the past 24 hours, down from 2,025 yesterday. Daily cases have been above 1,000 for 58 days. The government is planning to unveil revised distancing guidelines tomorrow that may potentially include allowing family gatherings during the Chuseok holiday.
• Data earlier showed CPI rose faster than expected, staying at a nine year high of 2.6% and above the BoK's 2% target for the fifth month. Final Q2 GDP was also slightly faster than expected at 6.0% Y/Y, while the Q/Q print rose 0.8%, both 0.1ppt faster than the preliminary readings. Following the data BoK Gov Lee said the solid recovery trend would continue driven by exports and vaccinations. The CPI overshoot amid higher demand-side price pressures and rising inflation expectations could spur a steeper rate hike path, the BoK forecast 2021 CPI at 2.1%.