USD/HKD Holds Close To 7.8400, July Trade Data On Tap Today

Spot USD/HKD broke above 7.8400 late yesterday and hit highs in NY trade near 7.8425. We sit slightly lower now, back near the 7.8395 level in early dealings today. We aren't too far off early June highs around 7.8440, while the top of the peg band at 7.8500 beckons beyond that. On the downside, the 200-day EMA sits back at 7.8300.

• US-HK yield differentials maintained an uptrend for Wednesday, with the US yield pullback less evident in the very short end. 3 month Hibor fell to 4.78% in yield terms on Wednesday, we were above 5% at the end of last week.
• The weaker USD tone didn't aid HKD sentiment much through the session, although the 12 month outright sits comfortably off recent highs, last near 7.7760, against recent highs close to 7.7840. The 6 month outright has pulled back to 7.8000 (versus recent highs near 7.8040).
• The local focus remains on continued housing market weakness, with developers selling 55% of new homes completed in the first half of 2023, the lowest rate since 2019 (see this link).
• On the data front today is July trade data, due later on.