USD/KRW Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and near mid-range.
Key drivers:
- Rate gap: The Federal Reserve's decision to hold interest rates steady reflects a more cautious approach than the Bank of Korea's concerns about KRW weakness and potential inflation.
- Risk/commodities: The trend of the U.S. dollar is pressured by declining confidence due to retail sales missing forecasts, which can instigate a drop in USD holdings.
- One macro factor: South Korea's government intervention signals increasing concern regarding KRW volatility, aiming to stabilize the currency amid global uncertainty.
Range:
USD/KRW is likely to hold within its recent range, having traded steadily between 1430 and 1481.
What could change it:
- Upside risk: A stronger-than-expected U.S. jobs report could boost USD demand.
- Downside risk: Continued weaknesses in U.S. consumer spending may further depress the USD against the KRW.
