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Spot USD/HKD Rebound Continues, Risk Reversals Still Depressed By Recent Standards

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Spot USD/HKD continues to recover from earlier May lows sub the mid point of the peg band. We were last near 7.8160, above the 20-day EMA (near 7.8125), but still sub the other key EMAS (the 200-day at 7.8210 is the highest).

  • Yield momentum has turned back in favor of the USD in recent weeks. The US-HK 3 month differential is back to +66bps up a touch from recent lows.
  • US 3 month yields have risen a touch while HKD Hibor rates are off recent highs (3 month back to 4.74%).
  • The broader US yield backdrop has certainly added higher USD levels against the CNY and JPY, which will be impacting HKD to a degree.
  • In the risk reversal space, we continue to edge away from recent lows, last at -0.57 for the 1 month. Still, this is very depressed based of the experience in recent years.
  • On the data front, Hong Kong retail sales and money supply (both for April) print tomorrow.
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Spot USD/HKD continues to recover from earlier May lows sub the mid point of the peg band. We were last near 7.8160, above the 20-day EMA (near 7.8125), but still sub the other key EMAS (the 200-day at 7.8210 is the highest).

  • Yield momentum has turned back in favor of the USD in recent weeks. The US-HK 3 month differential is back to +66bps up a touch from recent lows.
  • US 3 month yields have risen a touch while HKD Hibor rates are off recent highs (3 month back to 4.74%).
  • The broader US yield backdrop has certainly added higher USD levels against the CNY and JPY, which will be impacting HKD to a degree.
  • In the risk reversal space, we continue to edge away from recent lows, last at -0.57 for the 1 month. Still, this is very depressed based of the experience in recent years.
  • On the data front, Hong Kong retail sales and money supply (both for April) print tomorrow.