USD/KRW Price Analysis: S. Korean won jumps towards 3-week tops on a likely sharp GDP contraction
- USD/KRW looks to retest 3-week highs above 1,240 amid risk-off.
- Dollar bounce, a potential sharp GDP contraction for the South underpin.
- No fresh update on N. Korean leader Kim Jong-Un’s health condition.
The odds remain in favor of the USD/KRW bulls, given the bearish fundamental news from the South while the US dollar continues to draw the safe-haven bids amid coronavirus crisis-led global gloom and doom.
Adding to the bearish sentiment around the South Korean won, the latest Reuters poll showed that the economy is likely to see the sharpest GDP contraction since 2008 in the first quarter.
Key findings
“Gross domestic product (GDP) for the January-March period is expected to have contracted a seasonally adjusted 1.5% from the previous quarter, when it grew 1.3%, the median forecast from the survey of 10 economists showed.
This would be the worst contraction since a 3.3% drop in the final quarter of 2008, and the first since the Sino-US trade war hit growth in the first quarter of 2019.”
South Korean won: Coronavirus economic fallout weighs
The Asian currency remains undermined by the falling exports and battered business activity, as a result of the lockdowns due to the virus pandemic. South Korea’s exports collapsed for the first 20 days of April by nearly 27% YoY.
Further, the cross continues to find support from a lack of fresh information on the health condition of the North Korean leader Kim Jong-Un, who is supposedly not seriously ill but getting treated for some cardiovascular problem.
At the time of writing, USD//KRW adds 0.15% to trade near 1,235, heading back towards the three-week high of 1,241.23 reached a day before.
South Korean won: Levels to watch