USD/SGD Outlook:
Bearish, reflecting a position significantly below the recent average and nearing recent lows.
Key drivers:
- Rate gap: The Federal Reserve has paused rate cuts while maintaining rates, contrasting with Singapore's more supportive monetary policy stance.
- Risk/commodities: Global de-dollarization trends are pressuring the USD, as countries increase trade in local currencies, undermining its dominance.
- One macro factor: Weak US retail sales have raised concerns about the strength of consumer spending, suggesting soft economic performance ahead for the USD.
Range:
The USD/SGD is likely to drift within its recent range, reflecting current pressures and lack of strong upward momentum.
What could change it:
- Upside risk: A surprise increase in US job growth in upcoming data could boost the USD.
- Downside risk: Escalating geopolitical tensions over trade could further diminish the USD's appeal, leading to lower valuations.
