HONG KONG (Dow Jones)--The Hong Kong dollar rose against the U.S. dollar Friday as some European banks sold the greenback on profit-taking after its recent gains.
In late Asian trade, the U.S. dollar twas at HK$7.7927, down from HK$7.7944 late Thursday. The U.S. unit was fixed at HK$7.7949 earlier Friday.
Traders said market participants are largely waiting on the sidelines to see how U.S. stocks respond to U.S. President Barack Obama's Thursday speech to Congress, in which he proposed a larger-than-expected US$447 billion package of measures, including tax cuts and spending increases, to revive the U.S. economy.
In the meantime, the traders expect the greenback to trade in a tight HK$7.7900-HK$7.7970 range. But "if U.S. stocks rise (later Friday), that could prompt investors to shift funds...into riskier assets and push down the greenback next week," said a senior trader at a local bank.
The moderation in China's inflation is also helping risk-sensitive assets, the trader said, noting that a major U.K. bank and a Swiss bank had earlier sold the U.S. dollar/Hong Kong dollar pair on profit-taking.
China's consumer price index decelerated to a 6.2% on-year rise in August from July's 6.5% increase, raising market hopes that the central bank is done with monetary tightening.
The one-year U.S. dollar/Hong Kong dollar forwards contract was quoted at a discount of 335 points to the spot rate, compared with a 348-point discount late Thursday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
