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Singapore Dollar Talking Points – MAS, USD/SGD

  • Singapore Dollar appreciates as MAS slightly increases slope of currency band
  • Inflation estimates were increased but the risk remains frictions to global trade
  • USD/SGD accelerated its reversal to rising chart range support as anticipated

We just released our 4Q forecasts for currencies like the US Dollar in the DailyFX Trading Guides page

As anticipated, the Monetary Authority of Singapore (MAS) slightly increased the slope of their S$NEER currency band at its semiannual policy announcement. The Singapore Dollar appreciated in the aftermath. Unlike conventional central banks, which attempt to influence the pace of the economy with interest rates, the MAS uses a trade-weighted exchange rate index instead given the nation’s large reliance trade.

While the slope was partially increased, the width and center of the band was left unchanged much like last time. The more hawkish tone was accompanied with increases in inflation estimates on account of higher global oil and food prices. They also expect wage growth to pick up pace in 2019 based on an improving labor market. As for growth, the monetary authority expects a continued steady expansion in the quarters ahead.

However, they also mentioned that risks to the outlook remain given the uncertainties with trade frictions between major economies. Just yesterday, it was announced that US President Donald Trump and China’s Xi Jinping will meet in November which could offer some resolutions later on. But for the time being, the intense selloff in global stock markets remain a primary driver for FX and USD/SGD.

USD/SGD Reaction to MAS Policy Announcement

Singapore Dollar Reversal Gains on Hawkish MAS Policy Announcement

Singapore Dollar Technical Analysis

As expected, the US Dollar continued struggling against its Singaporean counterpart given signs of fading upside momentum. At the time of this writing, USD/SGD prices are attempting to push under former horizontal resistance now support at 1.37451. A close under would expose the rising range of support from June. Meanwhile near-term resistance is at 1.38185.

USD/SGD Daily Chart

Singapore Dollar Reversal Gains on Hawkish MAS Policy Announcement

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

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