1400 in Focus as USD/KRW Reverses Towards It in AI-Linked Move – TD Securities

1400 is the level towards which TD Securities expects USD/KRW to retrace. The firm sees the Korean Won (KRW) weakening as investors move away from the AI build-out theme and global equities stay under pressure. KRW’s unusually strong positive correlations with US equities and relative US versus rest-of-world (RoW) equity performance underpin its view. TD Securities argues that continued AI-led equity weakness should bring further KRW declines against the Dollar and on crosses.

1400 in focus as equity correlations signal Won weakness

"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.)