■USD-KRW down to high-KRW1,120 level due to easing upward pressure on USD and CNY appreciation

The USD-KRW rate opened Tuesday at KRW1,132.0, down KRW5.9 from the previous close. Upward pressure on the USD eased as U.S. industrial production and manufacturing activity in New York State came in lower than expected and Fed Vice Chairman Stanley Fischer made comments favoring a gradual rate increase. The People’s Bank of China announced that it would appreciate the CNY against the USD, placing downward pressure on the USD-KRW rate. The rate declined further due to the burden of recent gains and USD selling for profit-taking. The USD-KRW rate closed the day at KRW1,129.4, down KRW8.5 from the previous close.
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■Caution over U.S. rate hike limited on mixed economic data; USD mixed against major currencies

The U.S. Consumer Price Index increased 0.3% MoM for September, meeting the consensus. However, the core CPI that excludes food and energy went up only 0.1%, missing the consensus (0.2%). Concerns over the Fed’s possible rate hike within this year cooled with the release of mixed price indicators. The USD was mixed against major currencies. The EUR-USD rate moved in the USD1.10 range and the USD-JPY rate in the JPY104 range. The British Prime Minister’s office said that Brexit negotiations with EU members will be put to a vote in the House of Commons. The GBP-USD rate rose to the USD1.23 range on easing concerns over a hard Brexit.

■USD-KRW to open lower on improving investor sentiment; volatility may increase around the release of China’s 3Q GDP and September indicators

The USD-KRW rate is expected to open today at KRW1,126, down from the previous close based on NDF exchange rates. With limited upward pressure on the USD, stock markets of developed countries such as the U.S. and Europe, advanced on expectations for corporate earnings. Investor sentiment improved. However, volatility may increase around the release of China’s 3Q GDP and major indicators for September today. Positive indicators should boost investor sentiment, limiting the upside of the USD-KRW rate. If indicators turn out to be weak, concerns over the global economy may reignite and drive up the USD-KRW rate.

Source : Shinhan Investment Corp. / Economist Keon-hyeong Ha(keonhyeong.ha@shinhan.com)