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- Monday, 12 October 2009 14:50:59 GMT Forex Strategy Outlook: US Dollar Range Likely to Hold on Low Volatility
The Singapore dollar fell through the overnight trading session on weaker than expected retail sales and EURUSD weakness. The USDSGD pair broke above the 1.4150 price level for the first time in six months.
Talking points
• Singapore Dollar Falls On Lower Retail Sales
• USDSGD Rises Above 1.4150 For First Time In Six Months
• Hong Kong Growth Slows
Singapore Dollar Falls On Lower Retail Sales, Hong Kong Economy Contracts
The Singapore dollar fell through the overnight trading session on weaker than expected retail sales and EURUSD weakness. The USDSGD pair broke above the 1.4150 price level for the first time in six months. Consumer consumption fell 3.2% in June from a year ago and was flat from the previous month as automobile sales fell 8.0%. Sales were lower for the first time in four month’s due to shoppers cutting their purchases of luxury goods, mobile phones, and computers. The country is battling inflation which has led to the IMF recommending that monetary officials let their currency appreciate.
Growth in Hong Kong contracted 1.4% in the second quarter pulling the annualized reading down to 4.2% from 5.9%. It was the first slowdown in more than a year as exports, investment and domestic consumption slowed. The global slowdown is impacting demand for Chinese-made exports which has seen activity in its ports slow. The USDHKD was appreciating through the night rising above the 7.8130 price level, when the news pushed it higher to test resistance at 7.8146.
The declining growth picture in both countries and the overall region will continue to weigh on the currencies. Additionally, dollar bullish momentum continues to grow stronger and the expected improvement in U.S. consumer confidence will only add to that story. We could continue to see weakness from the Asian currencies for some time to come.
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