USD/KRW reverses towards 1400 in AI-linked move – TD Securities

An unusually high positive correlation with US equities and their performance relative to the rest of the world underpins TD Securities’ expectation of a weaker Korean Won (KRW). With investors rotating away from the AI build-out theme and global equities still under pressure, the firm sees USD/KRW retracing upwards towards 1400. In its view, continued AI-led equity weakness should leave KRW facing further losses against the Dollar and on the crosses.

Won faces further losses as equity correlations weigh

"As for KRW, we continue to hold the view that USDKRW could retrace toward 1400. The Chart of the Week shows each major currency's one-year correlation to the standalone US equity market, and to the US vs RoW equity market ratio."

"Idiosyncratically, KRW has the highest positive correlation to the relative US vs RoW equity ratio and positive correlation to the standalone US equity market."

"As a result, in the case that the AI-led global equity rout persists, KRW should continue to retrace its year-to-date gains both against the USD and on the crosses. FX carry and value factors provide further confirmation of this view. While the Bank of Korea has hiked rates modestly in 2026, the level of KRW yield remains low in a global context."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)