Bias: The USD/HKD exchange rate is currently range-bound, being just above the 90-day average and near the midpoint of the 3-month range.
Key drivers:
- Rate gap: The Federal Reserve's interest rate is significantly higher than the near-zero rates in Hong Kong, which supports continued demand for the USD.
- Risk/commodities: Recent trends show heightened volatility in oil prices, which can impact global financial markets and affect the USD's strength.
- Macro factor: Ongoing geopolitical tensions, including recent airstrikes by the U.S. in Venezuela, are contributing to currency volatility and may influence USD demand going forward.
Range: The USD/HKD is likely to hold steady within the recent range, with minor fluctuations expected.
What could change it:
- Upside risk: A hawkish shift in the Federal Reserve's policy could strengthen the USD.
- Downside risk: A dovish tone from Federal Reserve speakers could weaken the USD against the HKD.