Investors Sidestep North Korea’s Missile Launch

  • Kospi rises as much as 0.4%, while won little changed
  • BOK policy meeting, GDP data this week matter more, they say

North Korea launched an intercontinental ballistic missile near Japan, but investors and analysts were unfazed by the latest provocation.

 The benchmark Kospi index opened higher Wednesday morning, gradually climbing as much as 0.4 percent with financial shares and automakers spurring the advance. The won was steady against the dollar at 1,084.15 as of 10:59 a.m. in Seoul, while benchmark 10-year sovereign bond yield was little changed at 2.492 percent.
The latest ICBM test fits a pattern of investors brushing aside geopolitical tit-for-tat moves and instead focusing on a world that’s still awash with liquidity, where economies and earnings are powering on. Among the focus are the Bank of Korea’s policy decision on Thursday and figures for gross domestic product on Friday, investors said.

Oanda Corp.

Stephen Innes, head of trading for Asia-Pacific:

  • The KRW reaction is very telling as USDKRW NDF barely moved, he said in a note
  • “Geopolitically risk desensitized investors view little chance of escalation and are using these opportunities to add risk”
  • On the broader won rally, he says the move has more to do with Thursday’s BOK rate decision. “Traders will be on the edge of their seat awaiting the BOK rate hike and more specifically what tone the governor will take. There’s a high chance for dovish interest hike. Crunch time for Asia FX traders,” he wrote

Bloomberg

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes