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US Dollar May Gain Versus SGD, PHP on Neutral Fed, Trade War Fears

US Dollar May Gain Versus SGD, PHP on Neutral Fed, Trade War Fears

Daniel Dubrovsky, Contributing Senior Strategist


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ASEAN Fundamental Outlook

  • ASEAN currencies depreciated against the US Dollar this past week
  • Focus for USD/SGD, USD/PHP remains on the US-China trade war
  • Neutral reiterance from the Fed risks compounding market pessimism

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US Dollar and ASEAN FX Recap

The US Dollar outperformed against its major counterparts this past week, climbing alongside the S&P 500 towards the latter-half of the past 5 days. Gains in US equities occurred despite simmering US-China trade tensions. There was a bout of market optimism as the US delayed imposing auto tariffs and Walmart and Cisco delivered rosy earnings reports.

Unsurprisingly, ASEAN currencies lost ground against their US counterpart, as anticipated. A notable underperformer was the Singapore Dollar. Weakness in the Philippine Peso was compounded by the BSP cutting bank reserve requirement ratios as the Bank of Indonesia stepped up efforts to Guard the Rupiah following the latest interest rate decision.

US Dollar and ASEAN FX Recap

US-China Trade War May Escalate

The focus for ASEAN currencies continues to be the threat of US-China trade wars given a relatively light regional economic calendar docket. The Singapore Dollar will likely look past local GDP data for developments in sentiment. During the final moments of last week, a report from CNBC crossed the wires noting that talks between the world’s largest economies stalled.

As a reminder, US President Donald Trump threatened to impose an additional $325b in Chinese import tariffs at a rate of 25% (on top of the current $200b). For the Philippine Peso, the prospects of cheaper crude oil, due to the commodity’s sentiment-linked status if stocks fall, can help curtail a PHP selloff in the event of more gains in the very liquid US Dollar.

FOMC Minutes and Fed Chair Jerome Powell

Another risk for currencies such as the Indonesian Rupiah and Malaysian Ringgit could be a speech from Fed Chair Jerome Powell and the latest FOMC meeting minutes. The former will occur towards the beginning of the week on Monday at 23:00 GMT while the latter is set for Wednesday at 18:00 GMT.

This is because the markets have been pricing in a rate cut from the Federal Reserve towards the end of this year, following a general dovish shift in policy expectations in central banks across the world. Locally, both the Philippine and Malaysian central banks delivered cuts. However, the Fed may reiterate its neutral stance. This may fuel risk aversion, boosting USD.

For more timely updates on ASEAN currencies and the impact of US-China trade wars on them, you can follow me on Twitter @ddubrovskyFX

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--- Written by Daniel Dubrovsky, Junior Currency Analyst for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.