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HKD: USD/HKD Holding Sub Midpoint Of The Band, Yield Differentials Lower

HKD
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USD/HKD is holding at 7.7910 in latest dealings, little changed in the first part of Thursday trade. We remain towards the bottom end of recent ranges, although early August lows just under 7.77 are still some distance away. Recent highs were marked around 7.8040, which coincided with a break above the 50-day EMA resistance point, although such moves back to late May of this year have ultimately proven good selling opportunities for spot USD/HKD.

  • The bias around US-HK yield differentials has been lower, but the 3 month spread at +0.80bps is only marginally above cycle highs this year. The 12 month spread has shown more downside, last at -11bps, albeit still above early August lows. Hibor rates have fallen sharply in recent months, the 12 month off nearly 100bps.
  • Interestingly, the 1 month USD/HKD risk reversal has spiked higher, albeit still favoring USD puts. We were last -0.31, against recent lows a little beyond -0.60.
  • The data calendar is empty until Thursday when unemployment figures are due. CPI prints on Friday. 

 

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USD/HKD is holding at 7.7910 in latest dealings, little changed in the first part of Thursday trade. We remain towards the bottom end of recent ranges, although early August lows just under 7.77 are still some distance away. Recent highs were marked around 7.8040, which coincided with a break above the 50-day EMA resistance point, although such moves back to late May of this year have ultimately proven good selling opportunities for spot USD/HKD.

  • The bias around US-HK yield differentials has been lower, but the 3 month spread at +0.80bps is only marginally above cycle highs this year. The 12 month spread has shown more downside, last at -11bps, albeit still above early August lows. Hibor rates have fallen sharply in recent months, the 12 month off nearly 100bps.
  • Interestingly, the 1 month USD/HKD risk reversal has spiked higher, albeit still favoring USD puts. We were last -0.31, against recent lows a little beyond -0.60.
  • The data calendar is empty until Thursday when unemployment figures are due. CPI prints on Friday.