USDHKD

USDHKD

Introduction to USD/HKD Pair

USD/HKD is a currency pair from the US dollar, the official currency of the U. S. and Hong Kong dollar, the official Hong Kong currency. The USD is the reference currency here, while the HKD is the currency of quotations. Hong Kong pegged its currency to the U. S. dollar in 1983. This help to make it more stable for many trade houses and financial companies in the region.
 
The Hong Kong dollar has been permitted to exchange against the us dollar at between 7. 75 and 7. 85 since 2005. It turns out that Hong Kong is both Asia’s most important financial and economic hub. Thus, it’s no surprise it attracts a huge number of merchants from around the world. USD/HKD is a financial instrument which is very volatile. The reason that the Hong Kong dollar is tied to the evergreen buck should justify it. 
 
The USD/HKD currency pair cannot go past 7. 75–7. 85. The main bank intervenes to maintain the national currency. This is if quotes break those thresholds. USD/HKD offers a consistent pace. This makes this pair of currencies very attractive to investors. 
 
The USD/HKD quotes always stagnate. This makes it impossible for an ordinary trader to use it to achieve steady returns. The quotes in USD/HKD are usually affected by: 
 
  • United States GDP, and Hong Kong;
 
  • Economic harmony between those countries;
 
  • Inflation.
 
 The quotes for this currency pair are influenced by several major variations. The two have a very narrow pricing range. You’d better keep your eyes open for developments in China. They could have a significant impact on the Hong Kong economic situation. Various crises could damage quotes from the USD/HKD. 
 
This currency pair is known for their elevated predictability. It’s not hard to foresee its step to the market. 
 
This pair’s liquidity is small – little more than 1% a day. The pair serves as a link between Hong Kong and America. This pair’s quotes are influenced by the similarity of the two trading partners’ economies. Sometimes, their health is caused by different causes.

About U.S dollar

The U.S dollar is the U. S official currency and territories under the 1792 Coinage Act. A dollar is subdivided into 100 cents for accounting and taxation. The U S Coinage Act in 1792 established a decimal currency through the introduction of nickel, dime and penny coins. We also have pound, ½ dollar, and ⅓ dollar coins, all still in production in 2020.
 
Over the years, different types of paper money were adopted by U.S Congress. The first been Federal Reserved Note adopted by the Federal Reserved Act in 1913. Issuance of U.S currency forms before 1971 was discontinued. Even though they still remain a legal tender.
 
U.S currencies in circulation consists of federal reserved notes denominated in USD.

About Hongkong dollar

Hong Kong dollar is the official currency of Hong Kong . It is subdivided into 100cents. HKMA or Hong Kong Financial Authority is the governments currency distributor. It is also a de-facto Central Bank in Hong Kong.  In April 2019, the HKD  is the ninth most purchased currency worldwide. Apart from its use in the Hong Kong, the HKD is also used in the neighbourhood of Macau, where it circulates with pataca, Macau currency.

USD/HKD Correlations to other pairs

Correlation is the connection linking two assets and how they swing in relation to one another. It range between -1 and +1. A correlation near the upper limit implies that both currencies move in consonance. This allow for no diversification or vice versa. 
 
A correlation of 0, which doesn’t exist in finance world means that movement of two assets is random.
 

Properties of a currency pair

Spreads
 
Spreads are a typical way the brokers make money. The pip difference between the price of the bid and the asking price is their profit margin. This is called the spread. It varies according to the account type model.
 
ECN: 0.9 | STP: 1.8 fees, the charge is a tax paid on each sale by the dealer. Again, it varies from account model to account form. Charge on STP = 0 fee on ECN= 6 to 10 pips (starts at as little as one pip) slippage.
 
Slippage is the difference between the executed price of the dealer and the execution price of the seller
 
This variation occurs when the order is executed using market execution. There are two reasons for the slip; Broker’s execution speed, and the volatility of the market.
 
Volatility
 
Forex volatility refers to fluctuations a currency shows while trading. In turn, these variations affect the measure of risk a trader is  been subjected to, but his return too.
 
Higher volatility indicates that the currency may perform a quick move in both direction over a little time.
 
In otherwards, small volatility indicates that exchange rate do not have the possibility for a wide variations. Instead, it moves with steady pace over a distinct time. 
 
Small  volatility carries few risk for stock traders. It is also harder to gain a profit , especially by seasonal traders like scalpers, day traders etc.
 

Trading strategy

Different strategies could be applied for USD/HKD.  The HKD trading is intense during Hong Kong working hours. This overlaps with Asian trading sessions. The USD is active during U.S.A trading hours. Major economic releases and events are observed with the help of these strategies-  a proactive, a reactive and a mixed approach
 
Proactive trading implies moving into market position before the release of data. This is based on your decisions on analysts forecasts. While the reactive approach means moving into a  market after data has been published.
 
 A  mixed approach combines the two approaches above. Assessing the profit/risk is a perfect complement to study of one’s exchange. 
 
  •  Atr indicator should be applied to the chart 
 
  •  Set the length to 1
 
  •   Add a 200-year SMA to this indicator
 
  • shorten the chart and you can analyze a long period of time
 
  • Pick the ideal timeline
 
  • Calculate the level of the floor and set this value as the min. Measure the amount of the 200-year sma and set this value as the min. USD/HKD rate as a proportion of the exchange spectrum. 
 
This is a perfect use of the above formulae.
 
 By combining your values with total trade costs, you can determine cost variations. This is by varying the parameters such as volatility and time frame.

Summary of USD/HKD Trading Principles

The currency pair demonstrates modest dynamics in the exchange rate. You need a large trading deposit to earn good money on this pair. Another downside of this pair is that it is vulnerable to global downtime.
 
The given currency pair is ideal for newcomers. Its high predictability enables novice traders to trade with excellent safety. It’s a rare asset, so you need to approach its analysis carefully. You can hardly contact it the same way as other currency pairs. Here you should rely on fundamental analysis.
 
You need optimal model of money management when dealing with this currency pair. Avoid risking too much. Rely on the trading amount you can afford losing.
 
In spite of the low volatility, USD/HKD changes its course from time to time. Its bounces can be either bullish or bearish and hard to forecast.
 
At any time, the Hong Kong Central Bank may come up with an intervention to back its currency. You need to keep it in mind when working out a trading strategy for this asset. The given pair is suitable for scalpers. Yet, the majority of experts are assured that one would better use medium-term as well as long-term strategies in USD/HKD trading.

Overview of Hong Kong Economy

Hong Kong’s economy is an integrated free-market economy with low tariffs. Almost open port trade, and well-established international financial industry.
 
The Hong-Kong Stock Exchange is a favorite destination for international firms and from mainland China. This is due to the internationalized and modernized financial industry in Hong Kong. Along with its capital market in Asia, its size, regulations and financial tools available that are comparable to London and New York. . 
 
Hong Kong is a full member of the International Trade Organization. The Hong Kong Stock Exchange is the world’s sixth largest. It has a market capitalization of about US$3,732 trillion.
 

Overview of USA Economy

The USA economy is very integrated and mixed. By nominal G.D.P and net income, it is the biggest economy of the world, and the second biggest by (P.P.P). It has the 8th biggest Per Capita G.D.P (nominal) of the world, and the 10th biggest Per Capita G.D.P (PPP) in 2019. The U.S has the world’s most technological and strongest economy.
 

What will happen if the USD/HKD peg is unbroken?

Its very hard for HKMA to lose their peg. If the peg breaks It will mean the HKMA (monetary authority) has exhausted it’s ability to defend their peg. The news will spread and speculators will swarm in and long USD/HKD pair. If HKD plummets imply capital flight out of HK$ into USD. To stem this outflow and restore confidence, HKMA will raise interest rates to the sky. You could see 10% or more and that will reverse capital flight from out to back into HKD.
 
The Hong Kong stock market will of course plummet on news of huge hike in interest rates.

USD/HKD top positive correlations

H1

USDHKD – USDHKD. 100.0

USDHKD – HKDJPY.   55.4

USDHKD – USDMXN. 54.4

USDHKD – USDNOK. 46.6

USDHKD – USDSGD. 42.7Read More

 

USD/HKD top negative correlations

H1

USDHKD – GBPTRY. -68.0

USDHKD – NOKJPY. -37.9

USDHKD – NOKSEK -36.8

USDHKD – USDTHB -36.5

USDHKD – SEKJPY. -35.7Read More

Resources And Refrences For USDHKD

https://take-profit.org/en/currency-correlation/usd-hkd/https://dowmarkets.com/currencies/usd-hkd/

FAQs

HKD has been pegged to the USD for a long time. For about as long as the British Pound Sterling was pegged to the Hong Kong Dollar. And there is no particular motive or reason why the HKD is pegged to the USD. Currencies peg to one another to help stabilize the currency it’s pegged to. It makes business and investments between the two countries easier and more predictable.
 
Also, small economies tend to peg their currencies to another country to help strengthen and grow the size of their economy. As for being stable, that depends on what is going on in the economy of both countries. Pegs are fixed rate of change, which are good.
 
 The HKD to USD exchange rate is about 7 – 1. The problem is that if there is a lot of inflation happening in the United States, Hong Kong then has to print money and create their own inflation. This is to keep a fixed rate of exchange. This is also a problem if one country is running a trade

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