Euro is one of the most used currencies in the European Union; it is in high request among traders and is liquid.
This financial instrument is not highly dependent on economic factors, does not lose its importance during economic recessions and sensitive situations on the market.
HKD (Hong Kong Dollar) is the official currency of Hong Kong and is considered as secondary currency on the global exchange market. In spite of its insignificant size, this country is called an economic titan.
The economy of this country is primarily based on international trade and the export of chemical production. Hong Kong is the leader for direct and indirect investments.
Hong Kong’s ability to adapt to changing conditions is achieved mainly because almost all economic activities are in private hands. The private nature of the business is complemented by strict observance of laws (which serve as a reliable guarantee for numerous investors), as well as developed infrastructure (which includes modern port, airport, and communication system along with city and suburban transport).
The reason is the different monetary policies, transparent government, and zero degrees of corruption. National Bank does not interfere in the regulations of the exchange rate; it has specific corridors within which they can control the exchange rate. This data is not open to the public; thus, it is tough to predict the HKD movement.
There are not so many economic factors, which can influence the Hong Kong Dollar. Since Hong Kong is named as the most important port and shipping harbor in Southeast Asia and worldwide, HKD is affected by international sea cargo turnover.
All the factors mentioned above make the pair EUR/HKD very unattractive for traders. From one side of the coin, the euro depends mainly on operations in banking sectors. On the other hand, the Hong Kong dollar is rising due to the quick development of international trade.Both of the currencies are gaining their strong and weak points in the same circumstances. In spite of this, traders can still make a profit, accepting the risks of high volatility.
As we know, Hong Kong geographically is situated very close to China and is interconnected with the economy of this country. Besides this fact, Chinese corporations open branches in Hong Kong or move their companies under the authority of this country.
The main reason for the transfer is clear and understandable tax policy and adequate legal protection of companies. According to statistical data, the Chinese economy tends to take second place in the world, after the United States, it is evident, that any issues in China will touch on the HKD.
It is essential to be aware that Hong Kong is 95% depended on imported raw materials and energy. The farming sector is not quite developed, as well as mining one, but the fishing industry is showing good results.
As a result, all economic processes are dependent on the cost of oil and primary materials. Declining quotes for these commodities enhance HKD. Nevertheless, these factors do not influence the currency a lot; the changes are temporary.
The main obstacle for dealers is the absence of the information regarding the corridor in which the HKD exchange rate will be encouraged. For example, in the year 2018, the National Bank of Hong Kong supported the exchange rate to 9.4 HKD for one EURO, and just in a couple of months, it has been changed to the standard price of 8.4 HKD. It is still not clear the real reason for such a jump.
The euro currency does not seem to be a winning cross-pair because the exchange rate is influenced by the decisions of the European Central Bank. GDP indicators, inflation, CPI (consumer price indexes), are the indexes, which are taken into consideration in financial decisions.
Traders do not have too many options to increase profit with this instrument, only if the ECB decides to put down the interest rate. It will lead to HKD strengthen and will form a narrow passage. This compound instrument does not ask for specific skills, but just a stroke of good luck.