South Korean Won bounces from lows at 1,550 USD in a suspected intervention

USD/KRW retreat from 1,550 raises speculation about a Korean Won intervention.
Reuters, citing a local trader, suggests that Seoul might have spent "a lot of US Dollars" to shore up the KRW.
A 7.6% weekly decline in the Kospi Index has triggered a strong KRW sell-off from foreign investors.

Guillermo Alcala FXStreet

The Korean Won (KRW) trades higher on Friday after a knee-jerk reaction at the 1,550 level against the US Dollar (USD), triggering speculation about an intervention by the South Korean Ministry of Finance. The pair had been dropping steadily throughout the week amid high KRW outflows and the US Dollar's strength.

Comments from South Korea's Finance Minister Koo Yun-cheol earlier this week, affirming that the current USD/KRW level, at mid-1,500, is excessive, considering the country's fundamentals, have boosted rumours that Seoul might have set the 1,550 level as a line in the sand for intervention.

A Reuters report has endorsed these views, citing a local trader who affirms that there was a lot of US Dollar selling for intervention, and stating that “it looked like authorities drew a line again at 1,550”.

Record KRW net outflows in May

The Won had depreciated by about 1.35% earlier in the week, as foreign investors sold 4.6 trillion Won worth of KOSPI shares. These figures follow a report from the Korea Financial Supervisory Service revealing a record net outflow of 47 trillion Won (USD 30.6 billion) of South Korean stocks in May, amid rebalancing operations, mainly from American and European investors.

Currency analysts from Commerzbank note that the Korean Won is the weakest performer among Asian currencies, which is contributing to boost inflation and forcing the Bank of Korea (BoK) to hike interest rates at its July 16 meeting. BoK Governor Shiun Hyun-song said earlier in June that the bank must hike interest rates “before it is too late” as risks from the financial and housing markets mount.

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Crypto Today: Bitcoin and Ethereum edge lower, XRP extends recovery as macro headwinds weigh

The broader cryptocurrency market is consolidating on Friday, with Bitcoin paring losses slightly above $84,000. Ethereum declines in tandem with BTC. Ripple (XRP), meanwhile, paints a different picture.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Federal Reserve (Fed) and the Bank of Japan (BoJ) have just done something remarkably similar. Both central banks raised interest rates by 25 basis points (bps) last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.