USD/HKD Market Overview – September 18, 2025

The U.S. dollar has continued its recent rally against the Hong Kong dollar, closing the day at 7.78047 HKD per USD on the IDEAL PRO exchange. The pair’s 52‑week high of 7.85004 remains above the current level, while the 52‑week low of 7.749 sits slightly below the present bid‑ask spread, indicating that the dollar has already recovered most of its recent weakness.

Drivers of the Current Exchange Rate

Federal Reserve Rate Cut

The U.S. Federal Reserve’s decision to cut the federal funds rate by 25 basis points, moving the policy range to 4.00 % – 4.25 %, has been a key catalyst for the USD’s strength. Market participants had largely priced in this move ahead of the announcement; the policy change has removed one of the primary drag factors on the dollar. Moreover, Fed officials signaled that further rate cuts may come later in the year, a stance that has reinforced the dollar’s position as a safe‑haven currency in an environment of uncertain global growth prospects.

Labor Market Weakness vs. Inflation

Fed officials emphasized that recent labor‑market slack outweighs inflationary pressures. While headline inflation has eased, the central bank’s outlook still favors continued tightening to anchor expectations. This narrative has bolstered confidence in the dollar, as investors anticipate a tighter monetary stance relative to other major economies, including those in Asia.

Asian Equity and Currency Response

Asian markets have reacted unevenly to the Fed announcement. Tokyo’s Nikkei index closed slightly lower, while Seoul’s equity series experienced a sharp decline. In contrast, Hong Kong markets showed resilience, buoyed by a technology rally that saw shares such as Baidu rise by 16 %. Nevertheless, the HKD’s relative stability is largely due to the currency peg to the U.S. dollar and the Hong Kong Monetary Authority’s willingness to intervene when necessary.

Technical Snapshot

  • 52‑Week High: 7.85004 HKD per USD
  • 52‑Week Low: 7.74900 HKD per USD
  • Current Close: 7.78047 HKD per USD

The USD/HKD pair remains above the 52‑week low, suggesting that the dollar’s recent gains are still in play. The 52‑week high, however, sits within reach, indicating a potential short‑term resistance level. Should the dollar continue to appreciate, it could test that ceiling, putting upward pressure on the Hong Kong dollar and prompting intervention by the Monetary Authority if the peg is threatened.

Outlook

  • Short‑Term: The dollar is expected to remain buoyant as the market digests the Fed’s forward‑guidance and monitors global equity performance. A slight pullback may occur if Asian stocks recover more robustly, which could soften pressure on the HKD.
  • Medium‑Term: With the Fed signaling at least two additional cuts by year’s end, the dollar may face a gradual normalization of its strength. This could support a more balanced USD/HKD exchange rate, especially if the Asian economies maintain resilient growth and monetary policy remains accommodative.

In summary, the USD/HKD pair’s current trajectory is firmly anchored by the Fed’s rate reduction and the prevailing economic narrative that favors continued monetary tightening. The Hong Kong dollar’s peg and the region’s mixed market response provide a buffer against extreme volatility, but traders should remain vigilant for any shifts in Fed policy or Asian equity momentum that could alter the dollar’s trajectory.