Hong Kong's currency, HKD maintained steady bullish pressure since May 2024, where the most recent buying pressure came following the Chinese central bank's fresh assistance measures for the mainland's troubled real estate market.
Hong Kong Labor Market Remained Steady
According to the Hong Kong Census and the Department's most recent labor force figures, Hong Kong's seasonally adjusted unemployment rate remained at 3% from February to April, unchanged from January to March.
The underemployment rate stayed steady at 1.1% for the same time periods.
Total employment climbed by roughly 5,700 from January to March, reaching around 3.7 million in February and April. During this time, the labor force increased by 7,700, reaching 3.8 million.
The number of unemployed people increased by almost 2,000 to 113,700 between February and April, while the number of underemployed people remained relatively stable at 40,500.
HK Bulls Are Influenced By China's Realty Rescue Reforms
According to ANZ Market Research, Beijing's property rescue strategy is substantially unaltered. Analysts predict that the new rescue plan unveiled on May 17 will pump CNY4.8 trillion into unfinished presold projects, stabilizing the financial status of construction projects.
Over the weekend, BofA researchers noticed an increase in visitor activity at display apartments in key cities, indicating that the physical market could rebound in May. However, they pointed out that low rental yields continue to reduce demand. While local government property purchases may stabilize prices, the private sector will mostly focus on quality improvements.
BofA analysts foresee only limited advantages from the easing measures, although they forecast a reduction in home price declines, aided by reduced mortgage rates and improved mood.
USDX Prepares For The FOMC Minutes
The US Dollar Index (DXY) started the week calmly, trading around 104.62 with little movement despite recent lackluster data performances. As financial conditions soften further, the Federal Reserve remains concerned about premature easing.
Despite recent economic metrics underperformance, the US economy is demonstrating resiliency. Given the ongoing softening of financial conditions, the Fed is leery about easing too soon. Last week's inflation and retail sales statistics were disappointing, and markets are now looking ahead to future S&P data for more insight into the US economy's health.
USDHKD Technical Analysis
Based on the daily outlook of USDHKD, the ongoing selling pressure is strong, as it came from a valid rising wedge breakout. Moreover, the 50-day EMA crossed below the 200-day SMA, suggesting a confluence to the selling pressure as a death cross formation.
In the main price chart, significant volume is seen at the 7.8201 level, which is above the current price and below the 7.8227 resistance level. Thereofre, as long as the current price trades below the high volume zone, we may expect the downside pressure to continue. In the bottom, the immediate support level is at 7.7934 level.
On the other hand, the gap between the current price and dynamic 50-day EMA has expanded, creating a bullish possibility as a mean reversion. In that case, any bullish exhaustion from the 7.8000 to 7.7859 zone could offer a long signal, aiming for the 7.8227 level.
