MNI BRIEF: China Hopes EU To Ease Frictions Via Negotiations

MNI: PBOC Net Injects CNY8 Bln Via OMO Fri; Rates Unchanged

MNI: PBOC Sets Yuan Parity Higher At 7.1196 Fri; -1.41% Y/Y

Non-EU Exports May Drop Questions April Incline

MNI: UK JUN FLASH MANUFACTURING PMI 51.4 (FCST 51.1); MAY 51.2

Services PMI disappoints but little market reaction overall

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

USD/HKD Stabilizing After Recent Test Sub Mid-Point Of Peg Band

HKD
EM BulletHomepageBulletMarketsEmerging Market NewsForeign Exchange Bullets

USD/HKD has stabilized somewhat following the recent break below the mid-point of the peg band. The pair was last around 7.8040. We sit below all key EMAs on a spot basis. The 20-day is the nearest, which is trending lower and last around 7.8125.

  • US-HK yield differentials are trending lower, last at +60.5bps, albeit still in the USD's favor. This has been more reflective of higher HK rates, with the 3 month Hibor back to +4.78%, fresh highs going back to Jan. US front end yields remains very steady near 5.58%.
  • Near term trends in spreads will continue to be dictated by the HK leg, as there seems little prospect of a meaningful shift lower in US front end.
  • We are starting to see some pick up in risk reversals, albeit from depressed levels. The 1 month was last at -0.58, against earlier May lows of -0.63. Still, it is early days in terms of any uptrend in risk reversals.
  • Tomorrow, April CPI prints for Hong Kong. The market expects an unchanged 2% y/y outcome.
175 words

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.

USD/HKD has stabilized somewhat following the recent break below the mid-point of the peg band. The pair was last around 7.8040. We sit below all key EMAs on a spot basis. The 20-day is the nearest, which is trending lower and last around 7.8125.

  • US-HK yield differentials are trending lower, last at +60.5bps, albeit still in the USD's favor. This has been more reflective of higher HK rates, with the 3 month Hibor back to +4.78%, fresh highs going back to Jan. US front end yields remains very steady near 5.58%.
  • Near term trends in spreads will continue to be dictated by the HK leg, as there seems little prospect of a meaningful shift lower in US front end.
  • We are starting to see some pick up in risk reversals, albeit from depressed levels. The 1 month was last at -0.58, against earlier May lows of -0.63. Still, it is early days in terms of any uptrend in risk reversals.
  • Tomorrow, April CPI prints for Hong Kong. The market expects an unchanged 2% y/y outcome.