SGD/JPY Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a strong driver.
Key drivers:
• Rate gap: The Monetary Authority of Singapore's accommodative stance contrasts with the Bank of Japan's recent interest rate hike, supporting the SGD.
• Risk/commodities: Oil prices are currently above average, which typically strengthens the SGD due to Singapore's status as an oil trading hub.
• One macro factor: Robust economic growth in Singapore has encouraged a stronger SGD amidst external trade challenges, including U.S. tariffs.
Range:
Expect the SGD/JPY pair to hold within the recent range, drifting slightly but not testing extremes.
What could change it:
• Upside risk: A fresh surge in oil prices could further boost the SGD against the JPY.
• Downside risk: Any signs of market intervention by the Japanese government could pressure the JPY further.