What is USD/HKD
USD/HKD is the currency pair that shows the value of the US Dollar against the Hong Kong Dollar. The left side of the pair is called the base currency, in this case the USD, and the right side is called the quote currency, in this case the HKD. This exchange rate tells you how many Hong Kong Dollars you need to buy one US Dollar. For example, if the USD/HKD pair is trading at 7.8500, it means that you need 7.8500 Hong Kong Dollars to buy one US Dollar. So, when the pair is going up in price, the US Dollar is said to be appreciating or getting stronger and the Hong Kong Dollar is depreciating or getting weaker, and vice versa when the pair is going down in price.
What are the most important USD/HKD charts to follow?
There are different ways you can display the exchange rate price movements on a chart. The most common ways include a line chart or a bar chart, but the most popular and used one is the candlestick chart. The candlestick chart shows you instantly and in real time where the price has opened, closed and how much up and down it went on any given timeframe.
Let’s say you want to check USD/HKD price on a daily timeframe. You go to your charting software, select the timeframe and select the candlestick chart (if it’s not set by default). This is what you would see on tradingview.com
Is USD/HKD a good pair to trade for beginners?
USD/HKD is not a popular pair among retail traders and there’s a reason. The HKD is pegged to the USD since 1983, so it always trades in a tight range and goes up or down when there’s a growing divergence in rate differentials. So, when the Fed it raising rates making the USD more appealing you can generally see the USD/HKD going up and even reaching the upper limit of the peg and when the Fed is cutting interest rates you can see the pair moving down and possibly touching the lower band of the peg.
What session is best to trade USD/HKD?
The best times to trade USD/HKD is during the North American Session. During this session we get major economic releases for US and more importantly the FOMC meeting eight times a year. The issue is that when the pair reaches the higher or lower band of the peg, it may just range there and do pretty much nothing for a long time.
Is the USD/HKD an important pair?
The USD/HKD is an important exchange rate for the Hong Kong Monetary Authority (HKMA), which is basically the central bank of Hong Kong and it’s responsible to keep the peg intact and intervene when the peg is threatened. Hong Kong considers the peg an anchor for financial stability and the stable currency facilitates trades and logistics that made Hong Kong such a big financial centre.
Will the USD/HKD go up or down?
The USD/HKD is expected to remain stable on the upper limit of the band between 7.84-7.85 price range. The pair reached the upper band back in May 2022 and stayed there ever since. It’s unlikely to see the peg getting removed and the HKD getting devalued as the peg survived many attacks and recessions without breaking. We may see the pair starting to go down towards the lower limit of the band when the Fed starts to cut rates, maybe sometime in H2 2023.
Is there a currency peg with USD/HKD?
The HKD was pegged to the USD back in 1983, which is why the HKD is a dull currency. The current band is set between HK$7.75 and HK$7.85. When the exchange rate reaches one of the limits, the Hong Kong Monetary Authority (HKMA) intervenes defending the peg and keeping it in the range. In the chart below you can see more than 15 years of price action.
Why is USD/HKD so stable?
The USD/HKD is so stable due to its currency peg set and controlled by the Hong Kong Monetary Authority (HKMA). The recent range of the peg was set in 2005 between HK$7.75 and HK$7.85.
How to trade the USD/HKD?
If you want to trade the USD/HKD, you need to have a good fundamental view on the likely trajectory of the Fed Funds Rate set by the Federal Reserve. When the Fed is expected and/or hikes interest rates, you can generally see the USD/HKD going up before stopping at the upper limit of the band. On the other hand, when the Fed is expected and/or cuts interest rates, you will see the USD/HKD going down before stopping at the lower band. This band though gives you a very strong support at HK$7.75 defended by the HKMA and a strong resistance at HK$7.85. When you see the Fed pivot in either direction, you can use those to limit your risk.
Where can I trade USD/HKD?
You can trade USD/HKD or any other Forex pair with a broker. Always choose a good, reputable, and regulated broker to avoid unnecessary problems. When you open a trading account with a broker, you will have to supply your KYC documents and, once approved, deposit money to be able to trade. Finally, you can use the broker trading platform to execute your trades. Most retail brokers let you also trade on MetaTrader 4 or MetaTrader 5, which are two of the most famous and popular trading platforms among retail traders. Most retail brokers offer CFD trading for Forex, although you can also trade USD/HKD via other derivatives like futures or options that trade on exchanges but are more expensive than CFDs.
USD/HKD correlation
Since the USD/HKD pair has a currency peg, there’s no real correlation with other assets except the Fed Funds Rate set by the Federal Reserve.
