South Korean Won: Export surge supports KRW recovery – OCBC

OCBC strategists Sim Moh Siong and Christopher Wong report that the Korean Won (KRW) strengthened alongside gains in tech equities, lower Oil prices and strong export data, including a surge in semiconductor shipments. They note a bearish engulfing pattern and rejection near 1388 in USD/KRW, pointing to near-term downside risk, though patchy foreign equity flows mean sustained buying is still needed for a firmer KRW footing.

Technical rejection signals softer USD/KRW

"KRW strengthened alongside gains in Korean, US tech equities and lower oil prices overnight. Domestic data was also supportive, with exports rising 78.3% YoY in the first 20 days of September, led by a 259% surge in semiconductor shipments."

"Trade surplus widened to USD23bn. But foreign flows remain patchy, with foreign investors turning net sellers of Korean equities again on Monday Asia despite gains in KOSPI."

"Near term, softer oil and slower pace of US Treasury yield increase should remain supportive of KRW, while USD/KRW’s rejection near 1388 and bearish engulfing pattern also point to some downside risk for the pair."

"Foreign equity flows remain key. A more sustained return of foreign buying would give KRW a firmer footing."

"Daily momentum remains bullish while RSI eased lower from overbought conditions. Bearish engulfing candlestick bears watching for any follow-through in downside momentum. Support at 1364 (21 DMA), 1350 levels. Resistance at 1388 levels (23.6% fibo retracement of Jul high to Sep low), 1405 (50 DMA)."