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Are these the faces of HKMA-USDHKD intervention?

HKMA stands between investors and USDHKD <7.75

Low-of-day for USDHKD 7.7491. This has significance which I covered yesterday in “Want to invest in HK Dollars? Will USDHKD go below 7.75?” To recall,

A collision will take place between currency investors, traders and Hong Kong Monetary Authority when this exchange rate goes below 7.75.

What happened the last time USDHKD traded below 7.75?

Massive intervention by the Hong Kong Monetary Authority.

 

Did HKMA intervene today? Are these the faces of a central bank intervention?

Central banks or monetary authorities (what Singapore and Hong Kong calls them) are powerful entities in the forex market. Besides press conferences and announcements, they make their presence felt from time to time through direct intervention. We want to catch them in the act when we can.

USDHKD daily chart

Daily chart of USDHKD

USDHKD 4-hourly chart

4-hourly chart of USDHKD (7.75 marked in orange)

USDHKD 1-hourly chart

1-hourly chart of USDHKD

USDHKD 15-minute chart

15-minute chart of USDHKD

USDHKD 1-minute chart

1-minute chart of USDHKD

These charts above may or may not show an intervention. We can only confirm later when HKMA makes its press release.  For those interested, we know from Reuters however that the last time HKMA intervened was 20 October, 29 November and twice on 11 December 2012. So we know where to look for charts to match the today’s technical picture.

Hourly chart HKMA intervention late-2012

Hourly chart showing the conditions which HKMA intervened the last three months of 2012

 

This is what Hong Kong Monetary Authority thinks about 7.75

This lesson is not complete until we hear from HKMA Chief Executive Norman Chan:

Q3.      Should funds flow into the HKD persistently, how long can the HKMA keep up with its operations in the foreign exchange market? Will changes be made to the Linked Exchange Rate [System] to contain inflation and asset price increasing pressures caused by “hot money”?

A3.      Under the Currency Board system, whenever funds flow into the Hong Kong dollar, triggering the strong-side CU, the HKMA can create Hong Kong dollars to buy US dollars from the market by way of expanding the Hong Kong dollar monetary base.  The HKMA’s ability to create Hong Kong dollars is limitless.  So people need not worry about any shortage of Hong Kong dollars required by the HKMA to keep up its US dollar-buying action.

I would like to reiterate the firm position of the HKSAR Government that Hong Kong has neither the need nor the intention to change the LERS.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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