SOUTH KOREA: Country Wrap: Consumer Confidence Steadies
Market Summary: The KOSPI had reached new all time highs for yesterday's close and is down -0.70% today as data softened and the Won lost ground by -0.06% to reach 1,395.26. Bonds are weak with the curve steeper with the 10-Yr at 2.85%.
- After hitting 7-Yr highs in August of 111.4, South Korea's Consumer Confidence for September's moderation to 110.1 seems somewhat expected. Fueled by the stabilization of politics, BOK rate reductions, surety of US tariffs and the removal of changes to CGT for stock holdings, the consumer in Korea has reacted very positively in surveys. Released by the BOK, the survey showed that households' inflation expectation for next 12 months fell to 2.5% The survey is based on responses from 2,277 households across the nation, conducted between September 9th to 16th. (source MNI)
- Korea's economy is expected to rebound in 2026, driven by easing uncertainties and accommodative policies, an official from the International Monetary Fund (IMF) said Wednesday, calling on the country to put in efforts to revitalize domestic consumption and accelerate structural reforms to further boost growth. (source Korea Times)
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BOBL TECHS: (U5) Bearish Theme
- RES 4: 117.710 High Aug 5 and a key resistance
- RES 3: 117.640 High Aug 7
- RES 2: 117.488 50-day EMA
- RES 1: 117.410 High Aug 21
- PRICE: 117.230 @ 05:59 BST Aug 25
- SUP 1: 116.950 Low Aug 15
- SUP 2: 116.840 1.00 proj of the Jun 13 - Jul 11 - 22 price swing
- SUP 3: 116.800 Low Mar 17 (cont)
- SUP 4: 116.637 76.4% retracement of the Mar 6 - Apr 7 bull leg (cont)
A bearish theme in Bobl futures remains intact. A strong sell-off on Aug 15 highlights the bearish threat and moving average studies are in a bear-mode position. The contract has pierced support at 116.970, the Jul 25 low and a bear trigger. A clear breach of this level would set the scene for an extension towards 116.840, a Fibonacci projection. Key short-term resistance is 117.488, the 50-day EMA.
EURUSD TECHS: Friday’s Rally Reinforces A Bull Theme
- RES 4: 1.1851 High Sep 10 2021
- RES 3: 1.1829 High Jul 01 and the bull trigger
- RES 2: 1.1789 High Jul 24
- RES 1: 1.1743 High Aug 22
- PRICE: 1.1703 @ 06:10 BST Aug 25
- SUP 1: 1.1596/1.1528 50-day EMA / Low Aug 5
- SUP 2: 1.1392 Low Aug 1 and bear trigger
- SUP 3: 1.1373 Low Jun 10
- SUP 4: 1.1313 Low May 30
The trend set-up in EURUSD remains bullish and Friday’s rally reinforces current conditions. Support at the 50-day remains intact, at 1.1596. A clear break of it would signal scope for a deeper retracement and potentially expose key support at 1.1392, the Aug 1 low. For bulls, a stronger resumption of gains would open key resistance and the bull trigger at 1.1829, the Jul 1 high.
JGBS: Slightly Richer, Gov. Ueda's Wage Comments In Focus
JGB futures are little changed, -1 compared to settlement levels, after giving up Friday's overnight gains.
- (Bloomberg) Bank of Japan Governor Kazuo Ueda said he expects a tight labour market to keep upward pressure on wages, reflecting his view that stable inflation is set to take hold.
- "Wage growth is spreading from large enterprises to small and medium enterprises," Ueda said Saturday in remarks at the Federal Reserve's annual symposium in Jackson Hole, Wyoming. "Barring a major negative demand shock, the labour market is expected to remain tight and continue to exert upward pressure on wages."
- Joseph Wang on X: "Good speech by Ueda on how Japan's ageing demographics are driving up wages. Increasing participation rates and retiring at a later age have reached their limits. It looks like the theory that ageing demographics is inflationary will be validated. https://t.co/YyW7JcMySw"
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after Friday's strong rally.
- Cash JGBs are flat to 1bp richer across benchmarks. The benchmark 10-year yield is 0.8bp lower at 1.617% versus the cycle high of 1.627%, set last week.
- Swap rates are ~2bps higher. Swap spreads are wider.
- Tomorrow, the local calendar will see PPI Services alongside an Auction for Enhanced-Liquidity 15.5-39 YR.
