Singapore Dollar: Energy risks could trigger further tightening – UOB

FXStreet Insights Team FXStreet

UOB strategists interpret Monetary Authority of Singapore's (MAS) July 2026 MPS as a calibrated tightening via a modest increase in the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) slope to an estimated 1.25% per annum, smaller than April’s move. They expect MAS to maintain this setting, but flag upside risk of another slope steepening if energy prices stay elevated and demand-pull pressures emerge.

Calibrated S$NEER slope steepening outlook

"MAS tightened policy in the Jul 2026 MPS by increasing the rate of appreciation of the S$NEER band, while leaving the width and centre unchanged."

"However, the extent of the tightening was smaller than in Apr 2026, which we interpret as a 25bps slope steepening to 1.25% p.a., reflecting a more calibrated approach to policy tightening."

"We expect MAS to keep the prevailing S$NEER slope settings (est. 1.25% p.a.) unchanged for the rest of 2026 and 2027, although we see risks of a further 25bps slope steepening to 1.50% p.a. in the Oct 2026/Jan 2027 MPS should energy prices remain elevated for longer and percolate into the broader CPI basket."

"In addition, we will be watching for signs of demand-pull pressures emanating from a significantly larger-than-expected positive output gap."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold: Upside remains capped by $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains around the $4,370 region per troy ounce on Friday. The yellow metal’s advance finds traction in declining crude oil prices, and manages to offset the continuation of the move higher in the US Dollar and rising US Treasury yields across the curve.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.