On Friday, the Hang Seng closed flat for the day after China Raised its short-term interest rates. This was in response to the Fed raising U.S. rates, along with its higher debt. This more than likely kept the Hang Seng trading higher. In addition, Singapore posted stronger export data as well. The Hang Seng closed flat to 24,309.93.

Fed Raises Rates

The Fed decided to rate rates when the March meeting concluded last week. The Fed raised rates to between 0.75% to 1%. There was a high expectation that the Fed would raise rates going into the meeting.

Which is why the dollar traded higher heading into the meeting. The Hang Seng index responded to the Fed Raising rates. It is likely what kept the Hang Seng trading higher the rest of the week.

Why would the Fed raising rates affect the Hang Seng? It wouldn’t affect it directly, but it would do so indirectly. When the Fed raised rates, it caused the dollar to trade higher. In turn, that caused the Renminbi to head lower.

The Chinese Renminbi trading lower is good for the Hang Seng for a few reasons. The first of which is that exports cost less for a business. That means more profit heads to the business. Secondly, a lower currency spurs buying in the economy. That is another way in which corporate profits rise.

Short-term Rates

What may have kept the Hang Seng flat were traders fearing that the debt in China was out of control. In an effort to combat against debt, the People’s Bank of China — PBOC — raised short-term rates.

It raised short–term rates by 10 points on both medium term lending facility, and open market operation reverse repurchase agreements. This was done in order to counteract the debt that the country is facing.

The MLF loans rate moved up to 3.05% and 3.20% after the change. The MLF rate is a tool that the central bank uses to adjust medium term interest rates at banks. In terms of the Open Market reverse repos, the PBOC changed the seven-day, fourteen day, and twenty-eight day. It changed them to 2.45%, 2.60%, 2.75% respectively.

Singapore Data

What may have kept the Hang Seng from trading lower would have been the positive export data from Singapore. The Southeast Asian nation reported that non–oil domestic exports rose in February by 21.5%. The reported number is good for a few reasons.

The first reason is that it beat the consensus forecast for 12.5% by analysts. The second reason is that it was higher than January’s 8.6% gain. This was good for the Hang Seng because it showed that export nations in Asia are not struggling. That is a sign that the economies in that territory are strong.

What Binary Options Traders Should Watch For

Traders should watch a few things.

The first of which would be to track if the Fed sticks to their scheduled rate hikes. Currently, it is aiming for two more in 2017. More rate hikes that will be a good thing for the Hang Seng.

The second item would be the short-term rates in China. If the rates are not changed appropriately, then the debt will get out of control. If that happens, the Chinese economy will face uncertainty. That could lead to trouble on the Hang Seng index.

The Final item that traders should keep an eye on would be export data from Singapore, and other nations. Such data shows the economic health of each country around the globe. That is an important aspect to consider on whether or not the Hang Seng will trade higher.