JPY/KRW cross likely to trade lower towards 9.60, rebound if U.S. Treasury sell-off rattles stock markets: Scotiabank

The JPY/KRW currency cross is expected to trade lower towards 9.60 over the near-term as rising 10-year U.S. Treasury yield would undermine the Japanese yen more should the VIX stay contained. The South Korean exporters’ dollar sell-off will help cap upside room for USD/KRW when approaching the month end.

After that, JPY/KRW cross will likely rebound if the UST selloff finally rattles US stock markets and boosts the VIX index, according to the latest research report from Scotiabank.

The 10-year UST yield is expected to rise again amid accelerating inflation and strong growth in the US. The US and China have agreed to hold off on threats to impose tariffs on each other, while Italy’s two populist parties have sealed a government deal.

"It could alleviate market concerns over US-China trade war and the Eurozone’s stability and improve global risk sentiment to some extent," the report added.

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