EUR/HKD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank (ECB) has kept interest rates steady, while the Hong Kong Monetary Authority (HKMA) is focused on maintaining the HKD peg to the US dollar.
• Risk/commodities: Oil prices have surged recently, influencing inflation and potentially supporting the euro due to its impact on global sentiment.
• One macro factor: Eurozone inflation fell below the ECB's target, raising concerns about future rate cuts and impacting the euro's performance.
Range:
EUR/HKD is expected to hold within its recent range with limited volatility.
What could change it:
• Upside risk: A stronger-than-expected eurozone economic report could lift the euro.
• Downside risk: Further pressure on the HKD from US dollar strength could weaken the EUR/HKD rate.