The USD to HKD exchange rate shows a range-bound bias.
Key drivers include:
- The Federal Reserve's anticipated interest rate cuts, likely weakening the USD as rate differentials narrow.
- Stability in Hong Kong’s monetary policy is expected, with the Hong Kong Monetary Authority maintaining a steady interest rate, reinforcing the HKD.
- Global economic growth and rising commodity prices are likely to impact the USD positively, but their influence could be limited.
The USD/HKD pair is projected to trade within a narrow range, stabilizing near current levels. Analysts from Barclays suggest fluctuations will occur but within a defined range through 2026.
Upside risk could stem from stronger-than-expected US economic data, potentially leading to a stronger USD. Downside risks include successful ASEAN efforts to reduce reliance on the USD, which could lead to increased volatility and pressure on the dollar's value.