Fears that capital could flee Hong Kong are visible just about everywhere in the currency market, testing the local dollar’s resilience to economic recession. Speculators are all-in betting on significant depreciation with derivatives, sending a measure of bearishness to near its highest level of the year. Volume on Hong Kong dollar options soared to $3.7 billion on Friday, with a third of the trades betting the pegged currency would hit or break the weak end of its trading band. Conviction that turbulence will get worse is also evident in the swaps market, where the spread between local and U.S. rates reached levels ... (full story)