USD/KRW: AI drives reversal towards 1400 – TD Securities

Further losses could lie ahead for the Korean Won (KRW) as investors move away from the AI build-out theme and global equities stay under pressure, according to TD Securities. The firm expects USD/KRW to retrace higher towards 1400. Citing KRW’s unusually strong positive correlation with US equities and with US equity performance relative to the rest of the world (RoW), TD Securities argues that sustained AI-led equity weakness should leave the Won facing additional declines against the Dollar and on crosses.

Do equity correlations signal further Won losses?

"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.)