Why the future of marijuana legalization remains hazy despite high public support 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Want to cut your energy bills? Here’s how five experts are doing it 
This fuel crisis could last for a while. It’s time for a new approach to fuel use - end it 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Stock Futures Dip as Investors Await Key Payrolls Data 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Oil Price Forecasts Rise for 2026 as Middle East Supply Risks Persist 
It seems that nothing can stop CNY and KRW, at least for now. KRW strengthened by another 0.2% versus USD this morning.
The rate hike expectation in South Korea has triggered the recent sell-off in USDKRW.
Some sort of dollar strength arisen lately but that was part of a broader turnaround in USD sentiment rather than anything KRW specific. Geopolitical issues have not ratcheted higher over this period but at the same time, the market remains wary that this could change quite quickly. This, in turn, leaves the market reluctant to chase USD/KRW lower.
As KRW accounts for 10% of China’s official CNY index, a rapid appreciation of KRW will translate into a lower USD-CNY exchange rate as the PBoC intends to stabilize the CNY-index.
However, even after past strong sessions, the CNY index has actually eased somewhat. In other words, if CNY fully tracks the KRW’s performance, USDCNY still has room to trend lower.
The G3 capex theme is a positive, as is the strength in China’s new economy (with the technology sector expanding strongly over the past 12 months). Korea is well placed to benefit from a continuation of these trends.
In fact, the Korean authorities think that KRW’s recent appreciation is overdone, warning that it will take actions to crack down the “excessive” activities.
However, it seems that nobody takes this seriously as traditionally the Bank of Korea is not an active player in the FX market. At the end of the day, the market cares about what you did, not what you said.
Risk-reward favors long dollar exposure from a short-term (1-2m) trading perspective. Large move relative to history and EM peers: The 5% KRW appreciation in the past two months represents a two-standard-deviation move (over a 2m period) since 2012 and the performance gap versus EM peers is very high.
Reversal after a large appreciation: In four episodes since 2012 when USDKRW has fallen by a similar magnitude as currently, the cross has subsequently corrected higher in three instances. Also, the BoK has been passive for most the year but could become more active in limiting downside given the speed of appreciation and peer outperformance.
