Bank of Korea Expected to Hold Interest Rates as Weak Won Limits Policy Easing 
Markets React as Tensions Rise Between White House and Federal Reserve Over Interest Rate Pressure 
Thailand Economy Faces Competitiveness Challenges as Strong Baht and U.S. Tariffs Pressure Exports 
Bank of Japan Likely to Delay Rate Hike Until July as Economists Eye 1% by September 
Jerome Powell Attends Supreme Court Hearing on Trump Effort to Fire Fed Governor, Calling It Historic 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
RBA Deputy Governor Says November Inflation Slowdown Helpful but Still Above Target 
U.S. Urges Japan on Monetary Policy as Yen Volatility Raises Market Concerns 
U.S. Prosecutors Investigate Fed Chair Jerome Powell Over Headquarters Renovation 
Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
Philippine Central Bank Signals Steady Interest Rates as Inflation Rises and Growth Slows 
Korea Q2 GDP (Tue) is expected to improve compared to a year earlier (SG 3.1%, consensus 3.0%, previous 2.8%). The move lower in USDKRW is running into intervention flows and downside technical support and further gains in the won might be hard to come by.
The KRW IRS curve has steepened on mild directionality, but demand for long tenor cash bond will prevent this steepening from gaining momentum. A strong GDP report will further reduce market pricing of easing which is currently at 48% for a BoK cut in the next three months.
Well, for now existing traders can go long in long USD against KRW, holding long in 3m forwards of USDKRW in conjunction with selling a 3m OTM call (around 1225) is appealing given significant skew in the vol smile.
Long USD against a basket of the expected worst performers by region offers low negative carry (1.5% over six months) and provides some diversification benefits to guard against idiosyncratic country events.
All three countries will be hurt by slowing Chinese demand; Korea is particularly vulnerable due to high export exposure,
Selling the upside strike lowers the entry point of being long USDKRW the trade by 1.5%.
If both the spot and option positions are held to expiry, the option position does not entail any risk if USDKRW rises (selling the upside call limits the gain on the trade but any losses are offset by P&L on the spot position) and the risk is unlimited if USDKRW spot declines.
