KRW: Spot USD/KRW Back Under 1390, Offshore Equity Inflows Positive
USD/KRW finished up Wednesday trade at 1389.35, a won gain of 0.46%. This outperformed broader USD weakness, with the BBDXY down around 0.15%, while the DXY lost 0.25% for the session. Recent moves above the 200-day EMA (around 1396.8), haven't been sustained, and there may also remain some resistance at the 1400 level. Downside focus may rest on a move back to 1380, which marked late August lows.
- US Tsy yields finished lower across the benchmarks, as weaker JOLTS data weighed. The US-SK 1y1y rate differential got to fresh lows back to Oct last year, around +62bps. USD/KRW spot looks too high relative to this trend, see the chart below.
- Yesterday's modestly positive Q2 GDP revisions likely helped the won at the margins as well. In a little while we get the July current account/goods balance figures.
- US equity sentiment was better in terms of the aggregate indices, although the SOX still finished down for Wednesday trade. The MSCI IT index rose just over 0.70% though. To recap, the Kospi rose 0.38% yesterday, while offshore investors added $328.9mn to local shares, continuing a recent positive run of inflow momentum.
Fig 1: USD/KRW & US-SK 1y1y Rate Differential
Source: Bloomberg Finance L.P./MNI
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JPY: USD/JPY - Trading Heavy Even With A Bounce In Risk
The overnight range was 146.87 - 148.09, Asia is currently trading around 146.90. USD/JPY was capped by decent supply around 148.00 and traded heavy for most of the overnight session ignoring the big bounce in US Equities. Price has moved very quickly away from the pivotal 151/152 area much to the relief of Institutional JPY longs and the BOJ. CFTC Data shows leveraged accounts had started to aggressively build Yen shorts last week so this quick move lower would be a bitter pill to swallow. Price is testing the first support area around 146.50/147.00, a move sub 145.00 is needed to turn momentum lower once more, until then the 145.00-151-00 range should dominate.
- Bloomberg - “MUFG CEO Hironori Kamezawa called on the BOJ to raise its policy rate as early as the next meeting to combat strong inflation.”
- “Japan is finally out of the grip of deflation that defined its lost decades — but now faces classic signs of stagflation. Inflation is climbing, buoyed by wage gains and rising price expectations. Fiscal policy is set to turn more expansionary after the government’s upper house loss, adding inflationary pressure from the demand side. But the Bank of Japan is still taking a cautious approach to its next rate hike, even after a trade agreement with the US helped ease tariff uncertainty, viewing the recent price surge as transitory.” - BBG
- Options : Close significant option expiries for NY cut, based on DTCC data: 144.00($1.13b).Upcoming Close Strikes : 147.00($1.31b Aug 6), 148.50($1.24b Aug 7) - BBG.
- CFTC data shows asset managers surprisingly added slightly to their JPY longs +75119( Last +72326), while leveraged funds aggressively added to their newly built short JPY position -31280(Last -11571).
- Data/Event : S&P Global PMI’s
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- South Korea to Sell KRW2.6 tn 30-Year Bonds
- South Korea to Sell KRW2.5tn 30-Year Bonds
- Hong Kong to Sell HK$14 Billion 182-Day Bills
- Hong Kong to Sell HK$62.989 Billion 91-Day Bills
- Bank of Thailand to Sell 65 Billion Thb of 91-Days Bills
- Bank Indonesia to Sell 32D SVBI Bills
- Bank Indonesia to Sell 92D SVBI Bills
- Bank Indonesia to Sell 186D SVBI Bills
- Bank Indonesia to Sell 365D SVBI Bills
- Bank Indonesia to Sell 273D SVBI Bills
- MAS to Sell S$1.8 Billion 252-Day Bills
- MAS to Sell S$15 Billion 28-Day Bills
- MAS to Sell S$21.9 Billion 84-Day Bills
- Philippines to Sell PHP 30.0 Billion 5Y Bonds
- Indonesia To Sell 2028 Sukuk Bonds (PBS030)
- Indonesia To Sell 2027 Sukuk Bonds (PBS003)
- Indonesia To Sell 2029 Sukuk Bonds (PBSG001)
- Indonesia To Sell 2049 Sukuk Bonds (PBS038)
- Indonesia To Sell 2039 Sukuk Bonds (PBS034)
- Indonesia To Sell 187D Sukuk Bills (SPNS10022026)
- Indonesia To Sell 270D Sukuk Bills (SPNS04052026)
ASIA: Coming Up in Asia Today
| 0000GMT | 0700HKT | 0900AEDT | South Korea CPI MoM JULY |
| 0000GMT | 0700HKT | 0900AEDT | South Korea CPI YoY JULY |
| 0130GMT | 0900HKT | 1030AEDT | South Korea CPI Ex Food + Energy YoY JULY |
| 0130GMT | 0830HKT | 1030AEDT | S&P Global Hong Kong PMI July |
| 0130GMT | 0830HKT | 1030AEDT | S&P Global Singapore PMI July |
| 0200GMT | 0900HKT | 1100AEDT | Philippines CPI YoY JULY |
| 0200GMT | 0900HKT | 1100AEDT | Philippines CPI NSA MoM JULY |
| 0245GMT | 0945HKT | 1145AEDT | China S&P Global PMI Composite JULY |
| 0245GMT | 0945HKT | 1145AEDT | China S&P Global PMI Services JULY |
| 0500GMT | 1200HKT | 1400AEDT | Indonesia GDP QoQ 2Q |
| 0500GMT | 1200HKT | 1400AEDT | Indonesia GDP YoY 2Q |
| 0600GMT | 1300HKT | 1500AEDT | HSBC India PMI Composite JULY |
| 0600GMT | 1300HKT | 1500AEDT | HSBC India PMI Services JULY |
| 0600GMT | 1300HKT | 1500AEDT | Singapore Retail Sales SA MoM JUNE |
| 0330GMT | 1300HKT | 1500AEDT | Singapore Retail Sales YoY JUNE |
| 0530GMT | 1300HKT | 1500AEDT | Singapore Retail Sales ex Auto YoY JUNE |
source: Bloomberg Finance LP / MNI
