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HKD/JPY 1H Chart: Falling Wedge Pattern In Sight

The HKD/JPY exchange rate has been declining within a falling wedge pattern since the beginning of July. From a theoretical perspective, it is likely that the currency pair could continue to trade downwards within the given pattern until the end of July. Then, a breakout north could occur, and the...

HKD Supported by Low US Yield and Seasonal Factors, Despite Huge Political Uncertainty Ahead

Recent strength of HKD has triggered the territory’s de facto central bank, HKMA, to defend the currency system. The key reasons for strong HKD are broad-based USD weakness, HIBOR-LIBOR spread, semiannual settlement and IPO activities in Hong Kong. Policy uncertainty has taken a backseat as the US government is...

HKD Weakened Despite Widening HIBOR-LIBOR Spread; Hong Kong’s Autonomy at Risk as China Seeks to Impose New Law

Volatility in USDHKD has increased since last week. HKD fell from the strong-side convertibility undertakings against USD after the Chinese Communist Party (CCP) announced the plan to impose national security law in the city. The 12-month HKD FX swap points jumped from 240 to 700 in two days' time....

HKD/JPY 1H Chart: Rising Wedge Pattern In Sight

The Hong Kong Dollar has been appreciating against the Japanese Yen since the beginning of September. This movement has been bounded in the rising wedge pattern. As apparent on the chart, the HKD/JPY exchange rate has been trying to breach the given pattern north since the middle of October. Given...

Concerns over Capital Outflow in Hong Kong Exaggerated

As the anti-extradition protests enter the fourth month, the market is increasingly concerned about the liquidity and economic slowdown in Hong Kong. Goldman Sachs' report has unnerved investors about the financial stability in Hong Kong. However, we believe the worries are exaggerated. Economic slowdown, mainly driven by Chinese economic...

Moody’s and Fitch’s Downgrade Hong Kong on Concerns about Closer Link with China

On the 100th day of Hong Kong’s anti-extradition movement, Moody’s downgraded the territory’s outlook to negative from stable. Although the credit rating stayed unchanged at Aa2 (two notches above China's A1), a negative outlook signals that a rating downgrade could come in one to two years. Less than two...

Hong Kong Protests Will Continue, Lam To Withdraw Extradition Bill

After a summer filled with protests, Hong Kong leader Carrie Lam will announce the withdrawal of the Chinese extradition bill at 6pm local time. The MSCI Hong Kong Index posted its best gain since 2011 with a 5.4% surge, a rally that was much higher than three standard deviations....

EUR/HKD 1H Chart: Short-Term Decline Expected

The Euro has been depreciating against the Hong Kong Dollar since the beginning of August when the EUR/HKD currency pair reversed south from the resistance level—the monthly R1 at 8.8219. Currently, the pair is testin the support level—the weekly S1 at 8.6892. Note that the exchange rate is pressured by...

HKD/JPY 1H Chart: Falling Wedge Pattern In Sight

On August 1, the HKD/JPY currency pair reversed south from the upper boundary of the falling wedge pattern at 13.96. The rate has been testing the lower wedge line at 13.40 since the middle of August. From a theoretical point of view, it is likely that the exchange rate could...

Trade War, Not Protests, is Key Reason For Slowdown. USDHKD Peg Not at Risk

Ongoing massive protests in Hong Kong against extradition to China have raised concerns about a rapid deterioration in the city’s economy and, more importantly, the collapse of the HKD-USD linked exchange rate system (LERS). This report suggests that the major reason for growth slowdown in Hong Kong is its...

China Weekly Letter: Economy Weakens, Hong Kong Protests Reach New Peak

Data point to more weakness in Q3, China plans more consumer stimulus Hong Kong protests calm down after violence hits a new peak Another bumpy week in the trade war Industrial growth lowest since 1990, more stimulus coming Chinese data this week was soft but not a disaster. On the...

Is USD/HKD Nearing its 2015 EUR/CHF Moment?

As my colleagues have mentioned in recent days, the ongoing protests in Hong Kong are reaching a critical level, with major implications for essentially every global market. For the second straight day, flights out of Hong Kong have been suspended while Chinese military forces gather in nearby Shenzen. The continued...

Short-Term Outlook: All About Earnings, Trade, And Easing

Risk appetite is waning as earnings season picks up and as political posturing between the Chinese and Americans see no substantial progress on the trade front. US stocks have been unable to extend the record rally despite a relatively good start to earnings season that has seen a majority...

Big Dollar Awaits NFP Data And Trump Currency Tweets

Thursday July 4: Five things the markets are talking about Euro stocks have edged a tad higher while U.S stock futures are unchanged following Asia's mixed session one day after new record highs for indexes stateside. Trading remains thin due to July 4th U.S celebrations. Global equity markets are enjoying a...

HKD’s HIBOR Soars, But With Limited Upside

Recent spike in HIBOR has sent HIBOR-LIBOR spread to the positive territory, a situation not seen in a decade for both 1-month and 3-month spreads. In our opinion, the upside for HIBOR is limited although it could stay elevated in the near-term due to seasonal factors. On June 13, both...

Commodities Reign Supreme on Heightened Middle East Tensions

Oil appears to be finishing the week on a positive note in what will be remembered as pivotal turning point with US/Iran relations and as global growth concerns were alleviated following strong dovish signals from the Fed and ECB. Late yesterday, the New York Times reported that US was prepared...

Chaotic Protests Grow In Hong Kong, Hang Seng Tumbles

One country, two systems appears at risk as for Hong Kong residents as protests grew chaotic. Thousands of protesters marched on major highways attempting to storm the Legislative Council in protest of the extradition bill that would allow Hong Kong residents to be sent to the mainland. The situation...

Demonstrations And HKD Rally

HKD Surges Demonstrations in Hong Kong over the extradition bill might be overshadowed by activity in the local FX market. Hong Kong dollar has risen to its strongest level against the USD in today trading at HIBOR has surged. HKD remains the regions most overvalued currency despite indications of economic...

Fed And Trade Threats To Drive Markets

Monday September 24: Five things the markets are talking about Global equities are under pressure as China called off planned trade talks with U.S, potentially triggering an escalation in the tariff war between the world’s largest economies. Note: U.S’ tariffs on +$200B in China goods took effect at midnight, while China’s...

Hong Kong Government is to Blame for the Economic Deadlock, as HKMA Intervened Again

Sharp moderation of Hong Kong GDP growth in 2Q18 and the recent intervention by the Hong Kong Monetary Authority (HKMA) to prevent HKD from weakening below 7.85 against USD have once again revealed the challenge facing Hong Kong – a economy highly dependent on China and a monetary policy...

Rising Rates Not Going to Derail Hong Kong Property Market, Weakening Chinese Economy Might

Although Hong Kong dollar (HKD) had approached the weak side (7.85) of the trading band against US dollar (USD) in May and June, after HKMA’s intervention in April, the gap between HIBOR and LIBOR has narrowed significantly since then. Through buying HKD and selling USD, HKMA’s numerous rounds of...

Singaporean Central Bank Turns Hawkish on Upward Core Inflation Pressure

The Monetary Authority of Singapore* (MAS) last Friday announced to increase the slope of the Singaporean dollar nominal effective exchange rate (SGD NEER) policy band “slightly”, the first adjustment since the policy tool was reduced to 0% in April 2016. As usual, the central bank did not disclose how...

HKMA bought HKD 3.59b in fifth intervention move

The Hong Kong Monetary Authority (HKMA) intervenes in the markets again today to defend the peg to US Dollar. HKD 3.59b (USD 457m) was bought by HKMA (at around 3pm HKT) as the currency remains persistently weak and continues to press its trading band. This is the fifth action intervention in...

Hong Kong Central Bank Intervenes as HKD Hit Weak Side of Trading Band

The Hong Kong Monetary Authority (HKMA) has just intervened in the currency market as the HK dollar (HKD) hit the weak side (7.85) of the trading band against US dollar (USD), the first time since 2005. The de facto central bank of the city has bought HK$816M Hong Kong...

Hong Kong Dollar Weakest in Three Decades Due to Ample Liquidity

USDHKD has continued flirting slightly below 7.85, the weak end of its trading band. Since late-February, the market has been speculating about what and when the Hong Kong Monetary authority HKMA, the de facto central bank of Hong Kong, would do to maintain the peg. We judge that the...

New Zealand February Trade Balance Above Expectations

New Zealand February trade balance above expectations New Zealand economy is showing signs of recovery following recent February trade balance data given at NZD 217million (consensus: -100 million) or USD 157 million, its highest rate after NZD -655 million deficit in January. On the downside however, New Zealand 12 months...