USD/HKD Spot Remains Close To Top End Of Peg Band, 1 Month Risk Reversal Moving Off Recent Highs

Spot USD/HKD got to 7.8474 in NY trade on Tuesday before pulling back to ~7.8460 post weaker US data. There wasn't further downside though and we continue to track close to the 7.8465 in early Wednesday trade.

• The pair remains close to the top end of the peg band, largely ignoring broadly USD sentiment shifts. US-HK yield differentials are still skewed higher, with Hibor 3 month now nearly 100bps lower versus early August highs.
• The 1 month risk reversal sits further down from recent highs, last at -0.365. Back in January this metric started trending lower before spot USD/HKD rolled over (away from the top end of the peg band.
• In the outright forward space, the 12 month sits near 7.7810, slightly above recent lows, but still below August 25 highs near 7.7840. The 6 month is at showing a similar trajectory, last tracking close to 7.8025.
• The data calendar is quiet until tomorrow's July retail sales print. Both values and volumes are expected to remain healthy in y/y terms, with favorable base effects from 2022 still aiding momentum. July money supply figures also print tomorrow.