Mitul Kotecha , senior emerging markets strategist at TD Securities, recommends to go long on the USD/SGD cross for the target level of 1.4125, while maintaining a stop loss of 1.3561 and entry being at 1.3749 for an expected 3m horizon.

Key Quotes

“Singapore's economy is highly trade dependent and exports (NODE) data released today were very soft, dropping by -10% y/y, with electronics exports down -16.3% y/y. The outlook remains weak, with Singapore's electronics PMI having been in contraction territory for 5 straight months.”

“Even if China's economic stability continues there is little sign that it is benefiting the rest of the region, with China's stimulus continuing to be largely domestically orientated. Singapore can't count on impetus from this source.”

“SGD remains closer to the top end of the SGD NEER band and has scope to weaken especially as the MAS seems unlikely to move to a tighter stance at its October meeting.”

“SGD is the most highly sensitive currency to CNY/CNH gyrations and like TWD is a good proxy for likely further CNY depreciation. Indeed headlines from Chinese media today suggest little chance of talks, let alone a deal with the US anytime soon.”

“Having broken above the 200 day moving average, the upper Bollinger Band, and trendline resistance (from 3 Jan 2017), we think USDSGD has scope to move higher. We target a move to the 9 May 2017 high at 1.4125.”

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