USD/CNY likely to return to previous levels considering possible tariff rollbacks by the US in months ahead, says Scotiabank
Falling implied USD/INR vols amid rising optimism for phase-1 trade deal supportive of dollar-funded carry trade, says Scotiabank
KRW likely to recoup more of year-to-date losses along with yuan appreciation in coming weeks, says Scotiabank
The South Korea won is expected to recoup more of its year-to-date losses along with the yuan appreciation in the coming weeks, according to the latest research report from Scotiabank.
The Bank of Korea lowered its benchmark interest rate to 1.25 percent, adding to the monetary stimulus implemented in July. The central bank will take its time to assess the impact of the rate cuts, but notes that there is room left for further easing if needed.
According to the minutes of the September FOMC meeting released last week, top Fed officials reckoned "A clearer picture of protracted weakness in investment spending, manufacturing production and exports had emerged" between the July policy meeting and their September gathering.
US President Donald Trump said on Friday that the US and China have reached a "substantial phase-one" trade deal, with agreement on intellectual property, financial services and big agricultural purchases.
According to President Trump, it will take up to five weeks to get the deal written and the two sides are very close to ending their trade war. China on Tuesday clarified and confirmed that there was "no difference" with the US on reaching a trade agreement, amid mounting skepticism over the two nations reaching a "substantial phase-one" deal touted by US President Donald Trump, the report added.
It has improved risk sentiment and could alleviate concerns over global trade outlook further in the weeks ahead. In addition, the Fed announced last Friday that it will buy Treasury bills (T-bills) beginning October 15 at an initial pace of USD60 billion a month and continue those purchases into the second quarter of 2020.
"We would like to sell JPY/KRW cross now at 10.9, with a target of 10.4 and a stop of 11.2," Scotiabank further commented in the report.