SGD/USD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average, yet lacks a clear driver.
Key drivers:
• Rate gap: The Monetary Authority of Singapore has shifted its policy to a more accommodative stance, while the Federal Reserve has kept interest rates steady due to economic concerns.
• Risk/commodities: With oil prices showing mixed performance, uncertain commodity trends may affect the SGD as Singapore relies heavily on global trade.
• One macro factor: Singapore's economy outperformed expectations with significant growth in Q4 2024, but rising U.S. trade tariffs on Singaporean goods raise concerns.
Range:
The SGD/USD is expected to drift within its recent range, as current conditions do not indicate strong directional moves.
What could change it:
• Upside risk: A stronger than expected U.S. labor market report could boost USD demand.
• Downside risk: Further trade tensions or tariffs imposed on Singapore could weigh on the SGD.
