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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
HKD
Spot USD/HKD has reluctantly decoupled from the upper end of its permitted trading band after Fed Chair Powell cast doubt on 75bp rate rises becoming common and amidst continued purchases of the Hong Kong dollar by the HKMA. Still, the HKD7.8500 ceiling remains within touching distance.
- On Wednesday, the HKMA increased its purchases of the local currency by a further HKD13.824bn after earlier buying HKD11.775bn for June 17 settlement. The size of purchases announced Wednesday (HKD25.599bn) is the largest for a single day since Oct 8, 2009, when the Monetary Authority bought HKD26.350bn in defence of its currency peg.
- Elsewhere, the city's de facto central bank played catch-up with the Fed's rate hike and increased its own base rate to 2.00% from 1.25%. Note that the HKMA always tracks Fed rate moves owing to the Hong Kong dollar's peg to the U.S. dollar.
- Monetary conditions are tightening amid further gains in Hibor that serves as a benchmark for local mortgage rates. Hibor rose across the curve today after 12-month tenor reached its highest level since 2008 on Wednesday.
- Spot USD/HKD last trades at HKD7.8496, down 4 pips on the day and slightly away from the HKD7.8500 ceiling tested in the past few days.
Fig. 1: 1-Month vs. 12-Month Hibor
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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