Despite ongoing images and videos of......>

HONG KONG: Despite ongoing images and videos of unrest in Hong Kong, the HKD

remains stable, with markets showing little signs of stress via both spot and

NDF outrights.

- The HKMA CEO spoke at the beginning of the week, warning that protests have

impacted business activities, but reiterated that the Hong Kong monetary system

has remained stable and is continuing to run smoothly.

- Echoing the move in spot, the implied vol curve has eased in recent sessions,

pressing the 1m vol contract to the lowest levels since late August. Near-term

vols, however, remain pinched by the absence of Chinese and Hong Kong equity

markets this week, which are suspended for National Day holidays up until

Friday.

- Options markets have been equally becalmed, but a few larger call options

crossed in Asia-Pac hours, the most notable being trades consistent with a large

7.83/7.85 calendar call spread (near leg expiring Jan'20, far leg Jun'20).

- Retail sales due tomorrow are expected to show further downside for HK

economy, with sales volumes seen falling 17.8% and values falling 14.0%.