Overnight US Stock indices traded lower, pushing USD/SGD higher due to Risk Off sentiments which also saw USD/JPY traded lower. Early during today’s Asian trade, RBA’s negativity made matters worse and dropped AUD lower, bring other Asian currencies along for the ride. As a result, USD/SGD pierced above 1.24 for the first time this week, but the move was thwarted by the Chinese Government with their surprisingly low fix in USD/CNY, resulting in a sudden bout of strength for Asian currencies against the Greenback.
Hourly Chart
Reasons for such a strong Yuan fixing is unclear, as PBOC almost never reveal its intentions transparently. Analysts point at the tremendous positive Trade Balance data as possible reason for a stronger Yuan, while others believe that inflation may be creeping up on China. Regardless of the reason, at least for the purpose of USD/SGD, we should ask whether risk trends will reverse on the back of Chinese econs or will it still continue to stay in “aversion” gear?
Initial take is that we should not be too overly concern over the Chinese Trade Balance data as it is based on holiday month (Jan) which has the tendency to distort figures. Furthermore, fears of Chinese economic meltdown has been overly exaggerated, with the recent HSBC PMIs suggesting that China is doing fairly well. Despite so, Asian stocks are trading marginally higher, with US Futures doing the same. Hence if “risk-on” sentiment carries on, a scenario which USD/SGD back towards the rising trendline should not be ignored. This go together well with what Stochastic is telling us, with a recent top in place with reading under 80.0 after Stoch/Signal line crossing in the Overbought region.
Daily Chart
Longer term USD/SGD is still on the rise due to concern over Singapore’s economic health. Price is trading above the 1.233 ceiling and we are riding on the same bullish momentum that brought USD/SGD higher from Dec 18th to Jan 26th. From the broader perspective, 1.24 may not be as important as 1.243, as that was the previous swing high and the support back in Aug 2012. A break above 1.24 in the shorter term encourages price to push to 1.243, with potential bullish acceleration towards 1.255 if 1.243 is broken.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price holds strength ahead of US core PCE inflation
Gold price holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core PCE Price Index data for February, which will be published on Friday.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.