FX price action - USDSGD
Singapore Sales Trader
Summary: SGD is the second best performing currency against USD among 12 Asian currencies so far this year and key level to watch 1.3666 is being tested.
SGD is the second best performing currency – only behind HKD that recently strengthened off lower end of the trading band 7.85 - against USD among 12 Asian currencies so far this year. USDSGD has also had the biggest weekly sell off in seven years last week declining 2.5% on the back of broad based US dollar weakness with falling treasury yield post softer than expected US CPI.
One year forward rate of USDSGD implies 0.85% yield that seems to be less attractive relative to other major pairs with higher returns - EURUSD 2.5%, USDJPY 5% - as S$NEER still well bid near the upper band limit as MAS tightened monetary policy for the fifth time last month while today non oil domestic exports fell -5.6%the most since November 2019 with YoY China trade shrinking 32%.
USDSGD has fallen 5.3% from this year’s high near 1.45 and looks to have found some support forming triple bottom at 1.3666 that coincides with previous swing lows at the end of May and mid Aug. This level also corresponds to uptrend (from Jun 2021 low) and Fibonacci 61.8% retracement level (2021 low and 2022 high) so while further downside momentum is still likely towards next key level 1.34 if the current risk-on sentiment continues, near term reversal of the recent sharp sell off could also cannot be ruled out on any Ukraine-Russia geopolitical escalations.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.