USD/SGD Fundamental Analysis for April 18, 2019

USD/SGD started a bearish trend after the MAS meeting where SGD became 1.6% stronger than USD in October 2018 to 1.9% stronger than USD as at end-March 2019.

At the last MAS meeting, the Central bank acknowledged that the domestic economy has eased a pace of growth. The economy is likely to expand at a modest pace in the coming quarters. Core inflation has deccelerated more than expected due to the recent fall in oil prices and a stronger impact from the liberalization of the retail electricity market. Therefore, core inflation is assumed to be between 1% to 2%. Gross Domestic Product (GDP) growth would come in slightly below the mid-point of 1.5–3.5%. Core inflation, including prices of accommodation and private road transport, fell to 1.6% year-on-year in January–February 2019, from 1.8% in Q4 2018. The Singapore Retail Sales declined from 0.2% to -1.5% and GDP decreased from 1.9% to 1.3%. The foreign reserve remains the same. The economic data and the central bank's outlook indicate that the SGD will be weaker than USD in the short term. Thus, the USD/SGD pair might gain bullish momentum.

On the other hand, the US consumer price index rose from 1.5% to 1.9% while the consumer price ex-food & energy dropped in March. Producer price index increased from 0.1% to 0.6% and the Michigan Consumer sentiment decreased from 98.4% to 96.9%. Average hourly earnings for all employees rose 3.4% over the 12 months ending in February, which is a significantly faster pace than a year earlier. However, the manufacturing output contracted. Major US equity price indexes increased over the reporting period, while short-term funding markets generally remained stable. In the last FOMC meeting, the board discussed whether to eliminate the Federal Reserve's securities holdings at the end of September 2019. The Federal Reserve is closely monitoring the labor market and GDP growth rates. In the long-term prospects, the US economy is set to remain on a soung footing. However, the recent mixed economic data is making the market volatile and indecisive.

Today US Core Retail Sales report was published with an increase to 1.2% from the previous value of -0.2%, Retail Sales surged to 1.6% in March from -0.2% in February, and Unemployment Claims decreased to 192k from the previous figure of 197k, defying the forecast for an increase to 207k.

Meanwhile, USD is expected to assert strength versus its counterpart. Singapore's economy is feeble nowadays. In this context, SGD is losing further momentum in the coming days.

Now let us look at the technical view. The price is currently quite impulsive with the bullish momentum after bouncing off the 1.3500 support area. The price is expected to climb higher and break above 1.3580 resistance. So, the pair could extend an advance higher towards 1.3700-50 price area in the coming days. The price recently formed Bullish Divergence while ranging between the price boundary between 1.3500-80 area. Now the price is forming Bullish Divergence under volatile trend momentum after a long-term bearish trend. Thus, there is a greater probability of a bullish counter-move. As the price remains above 1.3500 area with a daily close, the bullish bias is likely to continue.


The material has been provided by InstaForex Company -

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