Singapore Dollar: Consolidation risk after recent gains against US Dollar – OCBC

OCBC’s Sim Moh Siong and Christopher Wong expect USD/SGD to consolidate as earlier Singapore Dollar (SGD) gains face a modest US Dollar (USD) rebound and position unwinding ahead of United States (US) core Personal Consumption Expenditures (PCE) Price Index data and Jackson Hole. Softer-than-expected July inflation is unlikely to change the SGD outlook after Monetary Authority of Singapore (MAS) tightening, with growth still firm and near-term price action driven by potential USD short squeezes.

Singapore Dollar vulnerable to USD squeeze

"SGD traded a touch softer overnight as the USD rebounded from recent lows, with part of the move likely reflecting some unwinding of earlier positions ahead of US core PCE data and Fed Chair Warsh’s speech at Jackson Hole later this week."

"Domestically, July core inflation picked up to 2.0% YoY from 1.6%, but was still below the 2.2% consensus expectations, while headline CPI rose to 2.2% from 1.9%, also slightly softer than expected."

"The softer-than-expected print is unlikely to materially alter the SGD outlook, particularly after MAS tightened policy in July and with growth remaining firm."

"Near term, some consolidation is possible especially if USD faces a short squeeze ahead of Jackson Hole."

"Bearish momentum on daily chart intact but RSI shows signs of rising from near oversold conditions. Retracement higher not ruled out in the interim. Resistance at 1.2740 levels (61.8% fibo retracement of 2026 low to high), 1.2790 (50% fibo). Support at 1.2680 (76.4% fibo), 1.2650."

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