Analysts at MUFG Bank, forecast the USD/KRW will trade at 1210 during the first quarter, at 1200 in the second quarter and at 1165 in the fourth. With the outbreak of the coronavirus, they now expect the Bank of Korea (BOK) to cut twice in 2020 as it did last year, once in 1Q and once in 2Q.
Key Quotes:
“Turned out we were right to be sceptical about blue-sky EM in January even though, of course, we hadn’t predicted the Wuhan coronavirus. You might say we were right for the wrong reason but we made a judgment, nonetheless, that things in EM were not as positive as thought. We are still wary of another shoe dropping. Going forward, the new coronavirus should dominate February (and quite likely 1H20). We think it takes time before the deleterious growth effects of a new disease is fully understood and priced (allowing for a natural human inclination to discount unpleasant news).
“We have made the assumption this global epidemic will be bigger than SARS for China, shaving 1-2ppt off of actual 2020 growth. With some luck we can keep it to the lower bound of the range. But Asian satellite countries around China – especially those in East Asia – will feel the effect, meaning the risk of shaving -0.5ppt off of 2020 Korean growth, which changes Korea in prospect from a 2% economy into, despite 5G and semiconductors turning the corner, a 1½% state, The Moon Administration and BOK won’t accept that, so we now expect a BOK cut in 1Q20 and quite possibly another in 2Q20.”
“FX being a forward-looking Market, we think the most extreme reactions will come sooner than later. We also expect KRW to react more than TWD, keeping TWD/KRW with a 39-handle as we discussed earlier.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.