FX Morning Update

The report highlights a shift in AUD sentiment following weak labor data and continued USD resilience despite risk-on headlines. It also notes KRW weakness driven by equity outflows despite strong underlying trade fundamentals.

Key Takeaways

• 1.Weak Australian labour data (unemployment rose to 4.5%) has shifted RBA hike expectations, making a June hike unlikely and increasing the risk of an AUD positioning squeeze.
• 2.The USD reaction to US/Iran headlines remains muted compared to commodities and rates, but client appetite to sell USD is low due to strong US data and rate differentials.
• 3.Despite record-level trade surpluses and positive semiconductor exports, KRW is facing pressure from offshore equity outflows, keeping USDKRW biased higher in the near term.

Table of Contents

• USD: Muted FX Reaction Function
• AUD: Positioning Risk Post Weak Labour Data
• KRW: Outflows Continue Despite Local Positivity
• Meme Of The Day

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