South Korea’s GDP Slows as Exporting Companies Take a Hit

The stock markets in the Asian and Pacific Rim were mixed this morning. Shares on the South Korean stock exchange slipped lower after economic data showed the country’s gross domestic product (GDP) slowed down in the third quarter.

The Kospi Composite Index, in South Korea, was slightly lower today and the Korean won fell from a session high near 1,132.80 to 1,138.60 against the US Dollar after the economic growth data was released. As of 9:50 am HK time the won was trading at 1,137.50.

Data from the Bank of Korea showed that that the Q3 GDP grew, quarterly, by 0.7 percent. This was just above expectations of 0.6 percent. On an annual basis the GDP grew by 2.7 percent. This was significantly below the second quarter expansion of 3.3 percent.

This slowdown in GDP was expected as the industrial production has also slowed. There was also a massive auto strike at Hyundai Motor. Hanjin Shipping also collapsed and Samsung Electronics faced massive recalls of one of its flagship products, the Galaxy Note 7. Samsung has also halted production and should take a better than $5 billion profit hit over the last half of 2016 into the first quarter of next year.

There is room for the Bank of Korea to give the markets another rate cut in the first quarter of the New Year.

Looking into today’s Forex universe, the US Dollar index is trading at $98.77 this morning during Asian trade hours. This is slightly lower than the session high at 98.83. The US Dollar is up from levels near $98 seen last week.

Traders are supporting the almighty buck as the Federal Reserve Board is keeping the door open to the possibility of a another rate hike in December. The Dollar to rise against most of its trading peers during the morning. This means Forex pairs beginning with USD moved higher. The USD/JPY Forex market moved towards the key ¥104 handle this morning. As of 10:00 am HK time the yen was trading at 104.41. The Dollar had hit a high of 103.20 last week.

It would appear that the USD/JPY is trying to break through its ceiling that runs around the range of 103.13 to 104.61. This range has been in play since mid-October. Should this happen, then we could see a test of the horizontal pivot at ¥107.