USDHKD pair. Trading Features
It is no secret that among traders all currency pairs are usually divided into main ones, crosses and outright exotic ones. The main currency pairs on Forex are the most popular on the world market, so it is on them that we can observe enormous liquidity.
As a rule, traders prefer to work with them due to their high volatility and sometimes with cross rates in order to hedge risks .
However, you will rarely find recommendations to trade exotic instruments anywhere in a textbook.
But in vain, because exotic currency pairs of the Forex market can also bring good profits, and will be especially interesting to investors who prefer to create low-risk schemes with hedging elements to make a profit from the swap.
The USDHKD currency pair consists of the currencies of two countries, namely the American dollar and the Hong Kong dollar. Thus, when you see quotes for the USDHKD currency pair, you should understand that you are buying the US dollar with the Hong Kong dollar.
The currency pair has one important feature, namely, it is always in a narrow range and has very low volatility. In order to understand what drives the quotes of a given currency pair, we suggest getting to know each country separately.
American Dollar (USD)
The American dollar is the most popular world currency, which is why it is the most liquid. Being the national currency of the United States, it is macroeconomic indicators, monetary policy, as well as the political vicissitudes of this country that have the strongest impact on the dollar.
So, when analyzing the American economy and forecasting the dollar, it is worth paying attention to monetary policy, namely interest rate changes and constant reports from the Federal Reserve. If we talk about global indicators, then first of all you should track data on Country's GDP, unemployment and employment, balance of payments, as well as oil prices, because the United States has a very highly developed industry.
Also, one should not discount natural disasters, since for the United States constant fires and tornadoes that cause severe destruction in some states are regular occurrences.
Hong Kong dollar (HKD)
Hong Kong is an autonomy of the People's Republic of China with the broadest rights to internal economic and monetary policy. Hong Kong itself is a state within a state, the only thing it had to concede to China is foreign policy, as well as the army.
Hong Kong is famous among entrepreneurs for its very transparent taxation system, as well as the complete non-interference of authorities in the affairs of entrepreneurs, which makes Hong Kong's economy one of the most transparent. Actually, it is the economy of Hong Kong that has the proud name “capitalist” because there are practically no barriers from the state.
If we talk about the factors that influence the HKD exchange rate, we can note a number of macroeconomic indicators such as GDP, Trade Balance, Unemployment. It is worth understanding that Hong Kong does not have sufficient resources, so its economy directly depends on world prices for gas, oil, metals, etc.
It is also worth clarifying the fact that Hong Kong's coffers are filled by 90 percent from the services sector, as well as the re-export of goods from China, so this data should be monitored very carefully.
Since the USDHKD currency pair is not suitable for intraday trading due to the high spread and very low volatility, it is usually used for strategies based on Carey Trade since there is a good positive swap for this currency pair if you take a sell position.