The Monetary Authority of Singapore (MAS) decided to maintain current policy band for SGD. Immediate concerns of the MAS appears to be inflationary concern which saw Singapore CPI grew 4.8% YoY. Majority of Analysts surveyed by Bloomberg and Dow Jones believed that MAS would weaken SGD during today’s policy announcement, and this development caught many by surprise.
USD/SGD H1
SGD weakened 0.65% against the Greenback immediately on the news release. We’ve broken recent swing low on 5th Oct, showing strong short-term bearish momentum.
USD/SGD Daily
On the daily chart we could see that USD/SGD is still locked in a downtrend setup. Hindsight is 20/20, and could have indicated to us the inherent bearishness in USD/SGD considering that the rally brought on by MAS easing rumors failed to push price higher than the low of 1st May. Stochastic is also showing signs of oversold.
Bottomline:
Though the bear trend is strong and does not appear to be stalling, SGD’s strength is coming under scrutiny with GDP shrinking 1.5% in Q3. Furthermore, one must consider broader USD strength globally as Singapore’s economic size is simply not large enough to pull it’s own trend against all the currencies. One must not disregard Euro-Zone crisis which could potentially weaken EUR further, hence strengthening USD and having a spillage effect on SGD as well.
