KRW: Won Outperforms Broader USD Gains, Equity Flows Help, BoK Seen Cutting 25bp
May-28 22:49
Spot USD/KRW finished Wednesday trade near 1375, little changed in aggregate for the session. This outperformed further USD index gains, with the BBDXY up close to 0.30%. The 1 month USD/KRW NDF finished up just under 1372 in NY trade on Wednesday.
- Spot USD/KRW remains within recent ranges, with upside focus likely to be in the 1380/90 region, which could generate selling interest. Recent lows rest near 1360.
- Wednesday's modest outperformance from the won may been aided by the +$460.5mn in net equity inflows, as the Kospi surged in onshore trade, amid corporate reform hopes (post next week's Presidential election) and broader tech optimism.
- Wednesday delivered lower EU and US cash equity outcomes, but US futures are higher in early Thursday trade, led by the tech side post better Nvidia earning results (which despite China headwinds). This may impart a positive bias on tech related plays in Thursday trade within the Asia Pac region.
- The BoK decision is the other focus point, with a 25bps cut widely expected. BOK forecast revisions may also be in focus. Spot USD/KRW looks too low relative to US-SK 1y1y rate differentials, but other drivers look more important at the moment (whether that be US-South Korea trade talks, broader equity trends, particularly in the tech space).
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GOLD: Gold Jumps on Poor US Data
Apr-28 22:45
- Gold climbed into the US open to finish ahead having been lower for most part of the trading day.
- Gold finished higher by +0.73% at US$3,343.98, having been as low as $3,268.23 earlier in the day.
- As the USD continues to soften and bond yields rallied ahead of key US economic data on Wednesday, gold jumped as expectations for weaker data grew.
- Overnights’ data release, the Dallas Fed. Manufacturing Activity, fell to its lowest in 5 years with survey respondents showing executives describing the current situation as "chaos" as supply line disruptions decimate activity.
- This has reduced expectations for Wednesday’s data which sees employment , inflation and growth releases.
- Gold had started the week in the Asian trading session on the back foot, trending downwards before the Texas data which has refocused attention on the possibility that already the trade war may be showing up in US data.
JGB TECHS: (M5) Off Highs, But Underlying Strength Persists
Apr-28 22:45
- 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: 140.60 @ 16:37 GMT Apr 28
- SUP 1: 139.38 - 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 holding the bulk of the recent 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.
NZD: NZDUSD - Consolidating
Apr-28 22:39
The NZD had a range overnight of 0.5928 - 0.5982, Asia is opening around 0.5975.
- “US Treasury Secretary Bessent said “all aspects” of the US government are in contact with Beijing, while reiterating his view that it's up to them to take the first step in de-escalating the trade fight.”(per BBG)
- (Bloomberg) -- New Zealand Finance Minister Nicola Willis gave a pre-budget speech Tuesday in Wellington. Says “Treasury has reduced assumptions for real GDP growth in 2025 and 2026.”
- “New Zealand’s economy will still be growing, but not as fast as forecast a few months ago”
- Says tariff announcements by the US government, countervailing tariffs being imposed by China and an uncertain path for future tariffs and exemptions have created volatile global economic conditions, “with forecasters around the world agreeing that global growth will be lower this year and next year than they were previously predicting”
- Key change is cutting Budget 2025 operating allowance to NZ$1.3b from NZ$2.4b.
- The NZD tried lower initially into London but found good demand back towards the 0.5920 area.
- The price action continues to suggest that dips will probably find demand, first support on the day is 0.5900 then 0.5800/50.
- CFTC data show Asset managers have slowed their pace of buying last week, Leveraged funds though have been using dips to reduce their shorts.
- Data : Filled jobs for March coming up
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
