KRW: USD/KRW Consolidates, Won Up Firmly Past Week, BoK Next Week
Spot USD/KRW's rebound got close to 1388 on Thursday before selling interest emerged. The pair couldn't back sub 1380 though and finished up at 1383, a won loss of 0.85%, unwinding a little over half of Wednesday's gain. The 1 month NDF finished up US trade just under 1381. Broader USD sentiment stabilized through Thursday trade, aided by a more calmer US Tsy backdrop. US data outcomes were also mostly better than market forecasts.
- For spot USD/KRW we are still down comfortably for the week, (ending last Friday at 1401.75). Downside focus will rest on recent lows at 1371.4. Selling interest is likely to emerge on any moves back into the 1390-1400 region. The simple 200-day MA is further north around the 1408 level.
- US equity sentiment was better on Thursday, but markets still faltered in the final part of trade. The US SOX index fell a further 0.57%, down for the sixth straight session. The MSCI IT was around flat. To recap, the Kospi fell 1.22% yesterday, while offshore investors sold -$201.6mn of local shares.
- Won and global equity shifts appear better correlated in recent months, while US-South Korea trade talks will be the other strong focus point in the pair.
- On the data front we had the April PPI print earlier, rising 0.9% y/y, versus a 1.3% gain in March. Next week we have the BoK rate decision with a 25bps cut expected.
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JGB TECHS: (M5) Off Highs, But Underlying Strength Persists
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.95 - High Apr 7
- PRICE: 140.74 @ 16:14 GMT Apr 22
- SUP 1: 139.52 - 1.0% 10-dma envelope
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs are extending the strong bullish reversal, rejecting any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, clearing moving-average resistance to print 142.40 at the new upper level. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.
AUD: Trump Fed & China Comments Support A$ In Crosses But AUDUSD Lower
AUDUSD bounced to 0.6390 in early trading today following comments from President Trump that he wouldn’t fire Fed Chair Powell and that China’s tariffs wouldn’t finish at the current 145%. It gave up those gains to fall to 0.6355, below initial support.
- The recovery in risk appetite drove a broad based recovery in the US dollar on Tuesday with only CAD posting an increase against the greenback (BBDXY +0.5%). AUDUSD was a mid-range performer with the pair down 0.8% to 0.6365, close to the intraday low. It had risen to a high of 0.6439 during Asian trading.
- AUDUSD’s clearance of key resistance at 0.6409 reinforces bullish conditions. Initial resistance is at 0.6439, 22 April high, while support is at 0.6370, 21 April low. A clear break of the 20-day EMA at 0.6291 would be a concern for Aussie bulls.
- AUDJPY fell 0.3% to 90.13 on Tuesday after a low of 89.64 but has jumped 0.8% to 90.81 today. AUDEUR was little changed at 0.5573 yesterday but in early APAC trading is up 0.7% to 0.5614. AUDGBP fell 0.4% to 0.4775 and is currently +0.5% to 0.4798.
- Kiwi continued to outperform Aussie with AUDNZD down 0.2% to 1.0672 on Tuesday but recovering to 1.0697.
- Equities rallied with the S&P up 2.5% and Euro stoxx +0.5% and the S&P e-mini is +1.4% so far today following Trump’s comments. Oil prices were stronger with Brent +2.4% to $67.82/bbl. Copper rose 2.5% and iron ore is around $99/t.
- Today Australia’s preliminary April S&P Global PMIs print.
NZD: Can't Hold Above 0.6000
The NZD had a range overnight of 0.5964 - 0.6029, Asia is pressing the lows as risk attempts to bounce once more.
- Treasury Secretary Bessent Tuesday privately told investors the tariff standoff is unsustainable and he expects de-escalation with China.
- “The IMF slashed its world growth forecast for this year and next, warning the outlook may deteriorate further amid risks of a global trade war. China’s growth estimate was cut to 4% in 2025 and 2026, down by 0.6 and 0.5 percentage points. Tariff threats have created uncertainty that’s “off the charts,” the funds chief said.”(per BBG)
- The move higher on Monday was in thin liquidity and looked overdone, as markets have stabilised and risk probes higher once more the move to sell USD has been unwound.
- The NZD could not hold onto to its gains above 0.6000 and has quickly retraced, after such a big move in such a short period, it would be healthy for the NZD to see a pullback and some consolidation.
- The price action continues to suggest though that dips will probably find demand, first support on the day is 0.5900 then 0.5800/50.
- CFTC data show Asset managers have been aggressively paring back their shorts last week, Leveraged funds not so much.
- NZD/USD: $0.5855(N$704mln) Expiry for Apr23 NY cut 1000ET (Source DTCC)
- Data : US S&P Global Services & Manufacturing PMI
Fig 1: NZD/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg
