The firm cites fading momentum, rich valuation, and negative correlation to AI equities as reasons for shorting KRW versus USD and JPY.
TD Securities has adopted a bearish stance on the Korean Won, targeting support near 1,400 in the USD/KRW pair. The firm initiated short KRW positions against both the US Dollar and Japanese Yen via non-deliverable forwards, citing waning bullish momentum and stretched valuations.
KRW strength has recently faded, with the currency trading rich against global peers, including the USD and JPY. TD Securities noted a negative correlation between the Won and the KOSPI index, alongside stabilizing AI equity sentiment post-Q2 US earnings, as key factors behind the trade.
The primary risk to this position stems from unhedged foreign inflows into Korean equities or corporate repatriation, which could drive KRW outperformance over the next three months.