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Bearish flow signals seen for USD-KRW, JPY-KRW

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.

  • Market Data
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