USD/KRW: AI-linked reversal toward 1400 – TD Securities
TD Securities expects the Korean Won (KRW) to weaken, with USD/KRW retracing higher toward 1400 as markets rotate out of the AI build-out theme and global equities remain under pressure.
TD Securities anticipates the South Korean Won (KRW) to depreciate, with the USD/KRW pair potentially retracing higher towards 1400 as investors shift away from the AI development theme and global equities face continued pressure. The bank emphasizes KRW's peculiarly strong correlation with US assets, relative to the rest of the world, suggesting that ongoing AI-driven equity weakness should contribute to further KRW declines against the dollar and on cross-currency pairs.
TD Securities maintains the view that USDKRW could rebound to 1400, noting KRW's high positive correlation to the US equity market and positive correlation with the US versus Rest of the World equity ratio. Should the AI-led global equity decline continue, KRW should likely continue its year-to-date gains versus the USD and other crosses.
The Bank of Korea's modest 2026 rate hikes and KRW's comparatively low yield reinforce this outlook. While the Bank of Korea has raised interest rates slightly in 2026, the KRW yield remains low internationally. Commercial notes and additional insights from internal and external analysts provide further context for this market outlook.
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