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29 Dec 2014
Upward pressure on USD/KRW to resume – ANZ
FXStreet (Barcelona) - Irene Cheung, Asia FX Strategist at ANZ expects USD/KRW to rebound towards 1.180 levels on the back of portfolio outflows, weakening JPY and rate cuts by the BoK.
Key Quotes
“Although USD/KRW is off its early-December highs, the odds are the pair will rebound in the course of 2015. We expect USD/KRW to end 2015 at 1,180.”
“Into 2015, we see the bias toward a rebound in USD/KRW, on the risk of renewed portfolio outflows, a possible interest rate cut by the BoK and renewed JPY weakness.”
“In terms of economic fundamentals, the US economy is now growing faster than Korea. Indeed, weak growth, coupled with risk of deflation, will provide room for the BoK to further ease monetary policy. Against our expectation of an interest rate cut, the BoK stood pat on rates in both the Nov and Dec meetings.”
“Our economists expect the central bank to eventually deliver a 25bps cut in Q1 2015.”
“We roll our long USD/KRW NDF position (initiated on 30 September at 1,059) by another three months, at 1,102, maintaining target at 1,150 with stop-loss raised to 1,080.“
Key Quotes
“Although USD/KRW is off its early-December highs, the odds are the pair will rebound in the course of 2015. We expect USD/KRW to end 2015 at 1,180.”
“Into 2015, we see the bias toward a rebound in USD/KRW, on the risk of renewed portfolio outflows, a possible interest rate cut by the BoK and renewed JPY weakness.”
“In terms of economic fundamentals, the US economy is now growing faster than Korea. Indeed, weak growth, coupled with risk of deflation, will provide room for the BoK to further ease monetary policy. Against our expectation of an interest rate cut, the BoK stood pat on rates in both the Nov and Dec meetings.”
“Our economists expect the central bank to eventually deliver a 25bps cut in Q1 2015.”
“We roll our long USD/KRW NDF position (initiated on 30 September at 1,059) by another three months, at 1,102, maintaining target at 1,150 with stop-loss raised to 1,080.“