KRW: Holding Close To 1300
1 month USD/KRW was range bound post the Asia close, not getting too far away from the 1300 level (we closed in NY just under 1301). Note onshore spot ended yesterday at 1302.90.
- The local data calendar remains empty today, but BoK Governor Rhee will hold the bi-annual inflation briefing at 10am local time. Tomorrow, the focus will rest on the first 20-days trade data for December.
- Elsewhere, the equity lead for the Kospi is once again negative, with tech indices continuing to track lower, now down for the fourth straight session.
- To recap, the Kospi lost 0.33% yesterday, while offshore investors sold -$40.9mn. Still the won has outperformed the softer equity trend in recent weeks, see the chart below.
Fig 1: USD/KRW 1 Month Versus Kospi
Source: MNI - Market News/Bloomberg
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USDCAD TECHS: Trend Needle Points South
- RES 4: 1.3808 High Nov 3 and a key resistance
- RES 3: 1.3695 Trendline resistance drawn from the Oct 13 high
- RES 2: 1.3571 High Nov 10
- RES 1: 1.3456 50-day EMA
- PRICE: 1.3382 @ 16:09 GMT Nov 18
- SUP 1: 1.3226 Low Nov 15
- SUP 2: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
- SUP 3: 1.3139 Low Sep 14
- SUP 4: 1.3023 76.4% retracement of the Aug 11 - Oct 13 rally
USDCAD remains bearish, but is trading above recent lows. Recent bearish price action has resulted in new multi-month lows and confirmed a resumption of the current downtrend. This also marks an extension of the bearish price sequence of lower lows and lower highs. A continuation of the trend would open 1.3205, a Fibonacci retracement. On the upside, key short-term resistance has been defined at 1.3571, the Nov 10 high.
US TSYS: Fed Terminal Up To 5.06% in June 2023
Tsys hold weaker levels after the bell, near lows/narrow range after nearly testing overnight lows through the second half. Limited reaction to existing home sales data: -5.9% less than estimated -7.1%, Oct leading indicator off more than estimated -0.4% to -0.8% MoM.
- Tsys saw renewed selling after comments from Boston Fed Pres Collins that 75bp NOT off the table - adding to decline of year-end step-down expectations after StL Fed Bullard's hawkish comments early Thursday.
- Fed Dec hike pricing up to appr 55bp now priced on OIS, or about 20% probability implied or about +1.5bp today or 2.5bp since before Bullard opined on 7% rates yesterday. Recall that pricing went as low as 51bp in the aftermath of the October CPI reading. Terminal pricing continues to rise above 5% mid-2023 to 5.06% (5.08% pre-CPI).
- Of note, the dip in year end policy-pivot expectations has contributed to heavy short end selling which in turn extends 2s10s inversion to new all-time low of 71.410 Friday morning - to -70.307 currently.
- Of note: Fed Chair Powell to speak on Nov 30 at Brookings at 1330ET - prior to this, he didn't have a speaking engagement on the calendar before the Dec FOMC. It will be a must-watch as it comes only 2 days before the pre-meeting blackout period.
AUDUSD TECHS: Heading North
- RES 4: 0.6956 High Aug 30
- RES 3: 0.6909 76.4% retracement of the Aug 11 - Oct 13 downleg
- RES 2: 0.6800 Round number resistance
- RES 1: 0.6797 High Nov 15
- PRICE: 0.6688 @ 16:08 GMT Nov 18
- SUP 1: 0.6634/6578 Low Nov 17 / 11
- SUP 2: 0.6551/0.6545 50-day EMA / 20-day EMA
- SUP 3: 0.6387 Low Nov 10
- SUP 4: 0.6272 Low Nov 3 and a key support
AUDUSD conditions remain bullish and this week’s move higher has reinforced current conditions. A short-term pullback would be considered corrective. The pair has recently breached 0.6768, the 61.8% retracement of the Aug 11 - Oct 13 downleg. The break opens the 0.6800 handle next. Firm short-term support has been defined at 0.6387, the Nov 10 low. Initial support lies at 0.6634 and 0.6578, the Nov 17 and 11 lows respectively.
