USD/KRW Outlook:
The USD/KRW is likely to decrease as it is currently below the 90-day average and near recent lows. This drop is influenced by a widening interest rate gap between the US and South Korea.
Key drivers:
• Rate gap: The US Federal Reserve's higher interest rates are drawing capital away from South Korea, which is struggling with low economic growth.
• Risk/commodities: The current risk-averse environment impacts demand for the KRW, leading to further weakness against the USD.
• Government intervention: South Korean authorities are poised to act against currency volatility, but measures may not provide immediate relief from the KRW's decline.
Range:
Expect the USD/KRW to drift lower within the recent 3-month range, remaining pressured from its current position.
What could change it:
• Upside risk: A stronger-than-expected report from the New York Empire State manufacturing index could lift the USD.
• Downside risk: Increased intervention by South Korean authorities could stabilize the KRW, moving it higher against the USD.