Standard Chartered notes as follows obtained a bearish SCTF flow signal for USD-KRW. Flow dynamics suggest there may be some correction in USD-KRW in the near term.
Standard Chartered notes....
- Fundamentally, we expect the USD divergence to continue to weigh on the KRW as the Fed potentially hikes rates in H2-2015.
- However, given that we do not expect any more rate cuts from the Bank of Korea, we have recently upgraded our short-term KRW weighting to Neutral from Underweight.
- We follow up on our new analysis of JPY-KRW using our corporate flow data.
- Flow dynamics suggest that JPY-KRW will fall this month. As the flow index is a relative measure to compare current data against historical data, the differential between JPY and KRW flow indices represents the current currency preference against the historical currency preference.
- We find divergence again, and this time, it supports a decline in JPY-KRW.


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