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Spot USD/HKD Consolidates Off Recent Highs, Risk Reversals Dip In Favor Of HKD

HKD

Spot USD/HKD sits near 7.8300 in recent dealings. Earlier April highs came in close to 7.8400. The pull back has seen spot test 20-day EMA support on the downside (around 7.8295) but we haven't been able to meaningfully break lower yet. The other key EMAs are clustered between 7.8225/7.8255.

  • The pair largely continues to follow the US-HK interest rate differentials trend. The 3 month spread was last near +90bps in the USD's favor. We aren't too far away from late August 2023 highs in this spread near+100bps.
  • Still, we have seen risk reversals move lwoer for USD/HKD. the 1 month has fallen back to -0.50 and got close to 2023 lows in recent dealings. Given we are in the top half of the peg band for USD/HKD, such moves aren't that surprising, which is historically what we also saw in 2023.

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