In the history of currency market break of a peg, tends to be the most profitable trade. It made George Soros famous and rich, who successfully orchestrated Black Wednesday, when BOE had to abandon its peg with German Deutschemark. SNB's peg abandon led to 40% appreciation in Franc against Euro in matter of minutes.

Now traders are jumping on the possibility that Hong Kong Monetary Authority (HKMA) might have to abandon its peg with US Dollar. Hong Kong Dollar has rather long history of pegging its currency. Since 1983, it has been pegging its currency around 7.8 per Dollar. HKMA in 2005, revised the peg to a range of 7.75-7.85 per Dollar.

Reason behind the speculation is Hong Kong economy is now trapped between, weak Chinese economy, on which its GDP and exports largely depend and rate hikes from US Dollar. HKMA, usually raises rates with US FED. As usual HKMA has followed FED in hiking rates in December, but that might led to further weakness in economy.

Today, due to heavy speculative pressure, USD/HKD pair posted one of its biggest daily moves in history. Third biggest in last 16 years. Today, HKD depreciated 0.325 against USD and currently trading at 7.7883. Possibility is rising of upside intervention into the pair by HKMA.

As of now, we don't expect HKMA to suffer peg break as FX reserve remains healthy at $360 billion around, however volatility could persist.