The USD/HKD price declined to the lowest level since April 28 after the relatively strong trade numbers from Hong Kong. It is trading at 7.7600, which is 0.35% below its year-to-date high of 7.7865.
Hong Kong exports and imports numbers
Hong Kong’s economy is making a strong recovery after slipping into a recession in 2020. The city’s economy is expected to have a quicker recovery as global trade intensifies. Also, the China security law passed last year has led to reduced protests that hindered the economic sector in the past two years.
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Data published on Thursday showed that Hong Kong’s exports rose by 24.4% in April after rising by 26.4% in the previous month. In the same period, imports rose by 25.2% after rising by 21.7% in the previous month.
In total, the country exported goods worth more than H$384 billion and imported goods worth more than H$416 billion. This led to a trade deficit of more than H$31.8 billion. The city’s exports increased by 30.8% in the four months to April. Exports to the Asian markets increased by 22.8% while those to the US rose by 22.6%.
The USD/HKD will later react to the latest US GDP data from the United States. Economists polled by Reuters expect the data to show that the economy expanded by 6.2% in the first quarter helped by the stimulus in the United States. The pair will also react to the latest initial jobless claims numbers from the US and the upcoming personal consumption index (PCI) data that will come out on Friday.
USD/HKD technical analysis
The Hong Kong dollar is a currency that is relatively different from other currencies because it is pegged to the US dollar. This means that it always trades between $7.75 and $7.85. When market forces pushes it below and above this range, the Hong Kong Monetary Authority (HKMA) tends to react by using its reserves.
Turning to the four-hour chart, the pair has been in a downward trend. It has even formed a descending channel that is shown in purple. Also, it has moved below the 25-day and 50-day weighted moving averages. Therefore, the path of least resistance for the pair is to the downside, with the next key target being at 7.7583. However, there is also a possibility that the pair will bounce back as bulls target the upper side of the channel at 7.7660.