USD/HKD Outlook:
The USD/HKD is likely to increase as it is trading just above its recent average and near recent highs. The recent strength of the US dollar is supported by a robust labor market, which boosts confidence in continuing growth.
Key drivers:
- Rate gap: The Federal Reserve has kept interest rates elevated, while the Hong Kong Monetary Authority has recently intervened to stabilize the HKD, widening the interest rate gap in favor of the USD.
- Risk/commodities: Recent geopolitical tensions have increased demand for safe-haven assets, benefitting the USD and placing additional pressure on the HKD.
- One macro factor: Strong demand for the USD follows a significant drop in US jobless claims, indicating labor market resilience that may support further economic expansion.
Range:
The USD/HKD is expected to hold steady within its recent range, potentially drifting higher.
What could change it:
- Upside risk: A stronger-than-expected US GDP print could bolster confidence in the USD.
- Downside risk: Economic disruptions or reduced demand for the dollar due to geopolitical instability may weigh on the USD.
