HKMA defending 7.85
Now if there is one thing the Swiss National Bank taught us about defending a currency peg it's this, never ever, under any circumstances, fully trust a central bank. However, as Adam pointed out, buying off the 1.2000 level did prove a profitable trade for quite some time and, isn't it great to know that a central bank is trading with you? Don't let fear hold you back from a decent opportunity.
So, today we have the Hong Kong Monetary Authority (HKMA) defending a peg and buying HKD at 7.85. See Eamonn's post here. This is a repeated pattern from the HKMA and they are in earnest to defend the peg. After the Turkish Lira fallout a number of EM currencies have been punished by the strengthening dollar and CB's are scrabbling around trying to mitigate the strong dollar. So, as you move up to your terminal and set your orders you can know that the HKMA is trading with you. Not a bad trading partner to have. However, don't risk too much as virtually nothing in life or forex is guaranteed and a currency peg is not to be totally relied upon.
So, with that being said, and the spread on the USD/HKD being rather large (and the lot size needed for a normal risk trade is enormous) there is still an opportunity to enter short at 7.85. However, don't get greedy and take the spikes down in intervention from the HKMA. See it as a free lunch, but don't bet the farm or the savings or anything silly. I really, really can't stress that enough. Stay safe guys and girls and don't go swimming without a life jacket. e.g. don't go trading without a risk plan and never ever switch from trading to investing. I know many of the readers here are long in the tooth and have all the scars to prove it, but for those newer to trading be warned. I think Adam's reminder of the SNB's retreat from the 1.2000 peg has been helpful to remember this lesson. See here for a reminder.
Price is now approaching the 100 MA (blue line) on the 1 hr chart, so that could be a good place to enter and stops above the peg level (don't forget to allow for the spread)
