USD/KRW Outlook:
The USD/KRW rate is slightly positive but likely to move sideways as it trades near its recent average. The US dollar has gained strength due to better job market data, but the KRW remains pressured by domestic economic challenges.
Key drivers:
- Rate gap: The widening interest rate gap between the US and South Korea benefits the USD, making it a more attractive investment.
- Risk/commodities: The increase in safe-haven demand following geopolitical tensions, such as possible military action involving the US, is boosting the dollar.
- One macro factor: The Bank of Korea is worried about the KRW's persistent weakness, indicating potential policy adjustments that could impact the currency.
Range:
The USD/KRW rate is likely to drift within its recent range, reflecting a stable environment but with limited upward momentum.
What could change it:
- Upside risk: A stronger-than-expected US GDP report could further strengthen the dollar.
- Downside risk: Any significant intervention measures by South Korea to stabilize the KRW might lead to a decrease in the dollar's strength.