USD/HKD Continues To Recover

USD/HKD spot sits just off recent highs, last at 7.8150/55. Earlier highs were just above 7.8160. The recovery in the pair has continued, in line with broader USD trends. We are now back above the 20-day EMA (which is no longer declining). The 50-day sits higher, just under 7.8200. Early August lows sit back close to 7.7925.

• US-HK 3 month rate differentials are ticking higher, although more so due to a modest pull back in 3 month Hibor, which is back under 5.20%, against recent highs around 5.43% at the start of the month.
• Risk reversals are relatively steady in the 1 month space, last near -0.32.
• USD/HKD 12 month outright is also drifting higher, the pair last near 7.7730. The 6 month outright is just under 7.7920.
• The local data calendar is quiet until Friday, when Q2 GDP revisions are due. The main news today being that L'Occitane International's controlling shareholder is in talks to take the company private (at a valuation around of $6.5bn). Local trading on the Hong Kong bourse in the shares has been suspended.