KRW: USD/KRW Rebounds Amid Higher US-SK Yield Differentials
Spot USD/KRW finished up at 1388.05 in Thursday trade, a won loss of 0.70%. We finished just above the 20 and 50-day EMA resistance points, while the 200-day is further north at 1395.2. Broader USD sentiment was positive as US trade unfolded, aided by better US data outcomes (initial jobless claims and the Philly Fed survey) and carry over from Wednesday's Fed decision. Both the BBDXY and DXY indices rose over 0.40% for Thursday's session.
- Won losses slightly underperformed these broader USD trends. Dovish BoK rhetoric in the aftermath of the Fed outcome, where the central bank highlighted it has greater scope to now focus on domestic issues, was also cited as a won headwind yesterday.
- At the last BoK meeting (in August) 5 out 6 board members indicated they were open to a rate cut within the next 3 months. The US-SK 1y1y rate differential continued to climb yesterday, now back to +68bps. Lows near the start of Sep were close to +51bps.
- In the equity space, the SOX surged 3.6% in Thursday US trade, while the MSCI IT gained 1.58%. To recap, the Kospi rose 1.4% yesterday and offshore investors added $243.6mn to local stocks.
- The local data calendar is empty today.
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ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW 1.3tn 3-Year Bonds
- Hong Kong to Sell HK$500mn 3.99% 2045 Bonds
- Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
- Vietnam To Sell VND 1.0Tln 2030 Bonds; (TD2530010)
- Vietnam To Sell VND 7.5Tln 2035 Bonds; (TD2535028)
- Vietnam To Sell VND 3.0Tln 2040 Bonds; (TD2540037)
- Bank Indonesia to Sell 94D SUVBI Bills
- Bank Indonesia to Sell 31D SUVBI Bills
- Bank Indonesia to Sell 185D SUVBI Bills
- Bank Indonesia to Sell 367D SUVBI Bills
- Bank Indonesia to Sell 273D SUVBI Bills
- China to Sell CNY125bn 2030 Bonds
- China to Sell CNY30bn 91-Day Bills
- India to Sell INR60bn 182-Day Bills
- India to Sell INR50bn 364-Day Bills
- India to Sell INR100bn 91-Day Bills on Aug. 20
ASIA: Coming Up in Asia Today
| 0200GMT | 0900HKT | 1100AEDT | CHINA 1-Year Loan Prime Rate |
| 0200GMT | 0900HKT | 1100AEDT | CHINA 5-Year Loan Prime Rate |
| 0820GMT | 1520HKT | 1720AEDT | Indonesia BI-Rate |
| 0900GMT | 1600HKT | 1800AEDT | Taiwan Export Orders YoY JULY |
| 0920GMT | 1620HKT | 1820AEDT | Taiwan BoP Current Account Balance 2Q |
| 1230GMT | 1930HKT | 2130AEDT | India Eight Infrastructure Industries JULY |
source: Bloomberg Finance LP / MNI
NZD: NZD/USD - Drifts Lower Probing Below 0.5900, Awaits RBNZ
The NZD/USD had a range overnight of 0.5891 - 0.5931, Asia is trading around 0.5895. US equities saw some profit-taking heading into Jackson Hole led by big Tech, this saw risk sensitive currencies like the AUD and NZD trade heavy. This combined with a market that is also reducing USD shorts going into the meeting saw the antipodeans drift lower. The NZD/USD is probing below 0.5900 and is eyeing its big support area around 0.5800/0.5850. The risks are slightly skewed to more USD upside as positions are lightened heading into Jackson Hole but would not expect any significant breaks until the market has heard what Powell has to say. Risk has opened muted this morning, E-minis +0.01%, NQU5 +0.01%. RBNZ today will provide another input.
- MNI RBNZ Preview-August 2025: Rate Cut, Focus On OCR Path. The RBNZ meets today and is likely to cut rates 25bp to 3.0%, the mid-point of its estimated "neutral" range. While it paused at the July meeting, it was with a clear easing bias.
- With the cut widely forecast, attention will be on the revised RBNZ outlook and tone of the statement and press conference. The focus is likely to be on the projected OCR path and whether it is revised lower suggesting further easing towards stimulatory territory as excess capacity persists.
- With the focus on the medium-term, the 2026 and beyond inflation forecasts will be the important ones and should remain around the 2% band mid-point.
- RBNZ-dated OIS pricing is slightly firmer across meetings with 23bps of easing priced for tomorrow’s meeting, with a cumulative 41bps by November 2025.
- Whole Milk Prices Edge Higher At Latest Auction : Overnight the whole milk powder auction (held around 2 times per month) saw average prices rise 0.3% to $4036. Whole milk powder prices are up from recent lows but still around 7.7% off 2025 highs (albeit presenting a supportive backdrop for NZ's terms of trade).
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5925(NZD400m), 0.5950(NZD320m). Upcoming Close Strikes : 0.5980(NZD660m Aug 21). - BBG
- Data/Event : RBNZ Cash Rate
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
