Won Weakness Post BoK, Bond-Curve Bull Steepens

1 month USD/KRW is gravitating higher, around +0.25% above end NY levels from Thursday. We were last close to 1371, which was also above intra-session highs from Thursday trade. Spot USD/KRW is near 1373 at the time of writing.

• A slightly dovish undertone from the BoK and not a great deal of concern around recent FX weakness, has likely aided higher USD/KRW levels. Importantly, BoK Governor Rhee noted the central bank can move independently of the Fed decisions. Still, the inflation trajectory is key to the rates outlook.
• Some local equity market weakness, the Kospi down, 0.50%, underperforming better US tech tones, is also an additional headwind.
• For the 1 month NDF, a clear break above 1370, could see 1383 targeted (Nov 10 2022 highs). Beyond that lies the 1400 level.
• In the bond space, south Korean Sovereign Bond curve has bull-steepened, with yields 2-8bps lower after today’s BoK Policy Decision. The 2- and 10-year yields are 3.40% and 3.56% respectively after reaching year-to—date highs yesterday as the local market processed the sell-off in US tsys following this week’s hotter-than-anticipated US CPI data.