USD/SGD to head towards the 1.43-1.45 area by year-end – Commerzbank


Share:

The Monetary Authority of Singapore (MAS) added fuel to the volatility with another surprising aggressive policy tightening. USD/SGD fell sharply post-announcement but the Fed and the USD will remain the key drivers and the bias is still to the upside to year-end, economists at Commerzbank report.

Another surprising tightening

“MAS raised the mid-point of the SGD NEER to the prevailing level. It was the second off-cycle announcement and the second one-off appreciation in the SGD NEER. It highlights continued concerns over inflation and the urgency to prevent a wage-price spiral. This is particularly given rising wages pressures and the tight labour market despite the easing in border controls post-covid. Q2 GDP grew 4.8% yoy from 4% in Q1.”

“Looking into next year, the Fed Fund Futures are pricing in a 50 bps rate cut by end-2023. This could provide some reprieve for SGD and Asian currencies in general. At the same time, however, it may be premature to expect smooth sailing for Asian currencies in 2023. They would have to contend with a less favourable and slowing global growth. Under these circumstances, we could continue to see SGD outperform the region given its sound fundamentals and its safe-haven status. 

“Near term, we could see USD/SGD head towards the 1.43-1.45 area by year-end before pulling back as recession fears in the US kick in and supersede rate hike expectations.”

Also read: USD/SGD should revisit the 1.41 handle soon – TDS

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds steady below 1.0800 ahead of EU data

EUR/USD holds steady below 1.0800 ahead of EU data

EUR/USD is holding steady just shy of the 1.0800 mark in the early European morning. The US Dollar is consolidating the upside amid a cautious market tone, as investors assess Friday's US NFP blowout and hawkish Fed expectations. Eurozone data coming up next. 

EUR/USD News

GBP/USD defends gains near 1.2050 amid renewed Brexit optimism

GBP/USD defends gains near 1.2050 amid renewed Brexit optimism

GBP/USD is defending minor bids near 1.2050 in the European session. The Cable finds support from the renewed Brexit optimism, despite a broadly firmer US Dollar. EU said that they have reached a breakthrough on trade reported in NI protocol talks. 

GBP/USD News

Gold bulls need validation from $1,905

Gold bulls need validation from $1,905

Gold price rebounds from monthly low, grinding higher around intraday tops surrounding $1,878 heading into Monday’s European session. In doing so, the yellow metal snaps a two-day downtrend amid the sluggish US Dollar.

Gold News

Is this the beginning of the end for crypto bulls?

Is this the beginning of the end for crypto bulls?

Bitcoin is the glue that is holding this 2023 bull run intact for Ethereum, Ripple and other altcoins. But chinks in BTC bulls’ armor are beginning to show, therefore, investors need to be cautious of a sudden reversal. 

Read more

The Week Ahead - RBA rate meeting, UK Q4 GDP and earnings

The Week Ahead - RBA rate meeting, UK Q4 GDP and earnings

Back in November the RBA hiked rates by a less than expected 25bps, amidst concern about the effects recent rate hikes were having on the Australian economy and ergo the housing market. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures