Broad US Dollar Sell Off Likely to Continue

Well, that's what the guy's in Hong Kong are saying right now . . . and they're the one's with all the real money, so maybe we should listen to them, eh?

A sell off in the U.S. dollar continued globally as investors switched to riskier assets, leaving the Hong Kong dollar at the strong end of its trading band against the U.S. unit late Tuesday.   The U.S. dollar will likely stay weak and hover near HK$7.7500 in the near term, traders said.

In late Asian trade, the U.S. dollar was at HK$7.7501, unchanged from late Monday. The U.S. unit was also fixed at HK$7.7501 earlier Tuesday. "The U.S. dollar's broad weakness has prompted selling by both investment and commercial banks, which could trigger an intervention by the Hong Kong Monetary Authority later," a senior trader from a U.S. bank said.

Under Hong Kong's currency board system, the Hong Kong dollar is allowed to trade between HK$7.75 and HK$7.85 to the U.S. dollar.  The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 201 points to the spot rate, compared with a 188-point discount late Monday.  "I saw many selling positions for the U.S. dollar by local and foreign banks. I don't see any sign of a turnaround in the near term," another trader from a U.K. bank said.

SOURCE: HK Dlr Steady Late; Broad US Dlr Selloff Likely To Continue - WSJ.com