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FX Traders Brace For Crisis As Hong Kong Dollar Forwards Explode To Record Highs
Hong Kong dollar traders are bracing for a crisis, pricing in an unprecedented squeeze in liquidity, with a gauge tracking the demand for cash jumping to the highest level on record. On Friday, HKD 3- 12-month forward points surged above 200 and 785, respectively, the latter soaring by a record 300bps, showing that the supply of cash in the foreign-exchange market is expected to collapse. Of note, forward points have spiked above all time highs, surpassing levels seen during the financial crisis. image The move was sparked by the widely reported news overnight that China is now set to establish a set of laws ... (full story)