USDHKD pair. Trading Features
It's no secret that traders typically categorize currency pairs into majors, crosses, and outright exotics. Major currency pairs on Forex are the most sought-after on the global market, which is why they offer the highest liquidity.
Traders typically prefer to trade them due to their high volatility, and sometimes even cross rates to hedge risks .
However, you'll rarely find recommendations for trading exotic instruments in any textbook.
This is unfortunate, as exotic currency pairs in the Forex market can also generate substantial profits and are especially attractive to investors who prefer to create low-risk, hedging-based strategies to generate profits from swaps.
The USDHKD currency pair consists of the currencies of two countries: the US dollar and the Hong Kong dollar. Therefore, when viewing the USDHKD currency pair quotes, you should understand that you are buying the US dollar with the Hong Kong dollar.
This currency pair has one important characteristic: it always remains within a narrow range and has very low volatility. To understand what drives this currency pair's price action, we suggest examining each country individually.
American Dollar (USD)
The US dollar is the most sought-after global currency, making it the most liquid. As the national currency of the United States, macroeconomic indicators, monetary policy, and political upheavals of the country have the strongest influence on the dollar.
So, when analyzing the US economy and forecasting the dollar, it's worth paying attention to monetary policy, specifically interest rate changes and regular Fed reports. When it comes to global indicators, the first thing to monitor is data on The country's GDP, unemployment and employment, the balance of payments, as well as oil prices, since the United States has a very highly developed industry.
Natural disasters should also not be discounted, as fires and tornadoes, which cause severe destruction in some states, are regular occurrences in the United States.
Hong Kong dollar (HKD)
Hong Kong is an autonomous region of the People's Republic of China with extensive rights to domestic economic and monetary policy. Hong Kong is essentially a state within a state; the only areas China has had to cede to China are foreign policy and its military.
Hong Kong is renowned among entrepreneurs for its highly transparent tax system and the government's complete non-interference in business affairs, making it one of the most transparent economies in the world. In fact, Hong Kong's economy proudly bears the name "capitalist" because the government imposes virtually no barriers.
When it comes to factors that influence the HKD exchange rate, several macroeconomic indicators can be noted, such as GDP, trade balance, and unemployment. It's important to understand that Hong Kong lacks sufficient resources, so its economy is directly dependent on global prices for gas, oil, metals, and other factors.
It is also worth clarifying the fact that Hong Kong's coffers are filled 90 percent by the service sector, as well as by re-exporting goods from China, so this data should be monitored very closely.
Since the USDHKD currency pair is not suitable for intraday trading Due to its high spread and very low volatility, it is commonly used for Carry Trade-based strategies, as this currency pair offers a good positive swap when taking a sell position.
