Free Trial

USD/HKD Shows Below Trading Band Mid-Point, China COVID Hopes Provide Support

HKD

USD/HKD has been under pressure and last trades at HKD7.8034, down 70 pips on the session, with a sharp retreat in USD/CNH aiding the move to session lows (HKD7.7982). USD/HKD probed the water below the mid-point of its HKD7.75-7.85 trading band for the first time since February, before moving away from intraday lows.

  • Both offshore yuan and the HK dollar are benefitting from hopes that China could relax its tight COVID-19 controls earlier. China's efforts to boost vaccinations have aided sentiment on that front.
  • 3-Month HIBOR refreshed two-decade highs today and now sits at 5.31%. The rate surpassed 3-Month LIBOR for the first time since mid-2020 last month. It has been increasing the distance from its U.S. counterpart since.
  • During a briefing to lawmakers, HKMA chief Eddie Yue reiterated that there is no plan or need to tweak the existing dollar peg system.

Fig. 1: 3-Month LIBOR vs. 3-Month HIBOR Spread

Source: MNI - Market News/Bloomberg

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.