Spot Approaching Top End Of Peg Band, Hibor Yields Still Tracking Lower

Spot USD/HKD's uptrend remained intact on Monday, the pair moving above 7.8460, which is where track close to in early dealings Tuesday. We are above mid-May highs, with the 7.8500 level (top-end of the peg band) the next upside target.

• 1 month Hibor fell to 3.82% yesterday, lows back to the first part of May. The 3 month is back near 4.52%, also multi-month lows. So, whilst US yields softened in Monday trade, the US-HK yield differential remained skewed in the USD's favor (3mth to +115bps).
• In the outright space, the 12 month broadly tracked sideways last near 7.78, while the 6 month has drifted a little higher, last just above 7.8030. The 3 month remains sub 7.8200.
• The 1 month risk reversal moved away from recent highs, last tracking at -0.345.
• The local focus remains on the authorities efforts to boost local equity market liquidity. Some analysts are calling for a lower stamp duty, similar to what China announced yesterday (see this link).