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Currency Market Analysis

Sep 24, 2018 | Currency Market Analysis

Global Themes

15-year record

The Hong Kong dollar has jumped to the highest level since November last year as the HKD turned in the largest one-day move since 2003.

Market positions had been heavily focused on a weaker HK dollar – with the strong greenback a key driver – but these positions reached a breaking point on Friday with a significant move to the downside in USDHKD.

Talks falter

The USD jumped higher this morning as markets reacted to the weekend’s move by China to halt trade talks with the US.

Media reports indicated China believes any breakthrough in negotiations will be unlikely before the US midterm elections in November.

The USDCNH climbed 0.2% from close to two-month lows.

The biggest gaines were seen in the safe haven markets with the Japanese yen and Swiss franc stronger.

The British pound tumbled after with a breakdown in Brexit talk responsible for a sharp fall in the GBP.

Fed watch

Apart from trade, the other major factor this week will be the US Federal Reserve meeting due on Thursday morning.

The Fed is widely celebrated to raise rates to a new band between 2.00% and 2.25%.

Importantly, markets will be looking to the Fed’s latest forecast with a pick-up in US growth making further hikes more likely.

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