AUD/SGD Outlook:
Bullish, as the rate is significantly above its recent average and trading near recent highs.
Key drivers:
• Rate gap: The Reserve Bank of Australia raised interest rates, which has strengthened the AUD against the SGD.
• Risk/commodities: Rising demand for Australian commodities is supporting the AUD’s upward movement.
• One macro factor: Australia’s CPI increase has heightened expectations of further RBA rate hikes, reinforcing AUD strength.
Range:
The AUD/SGD is likely to hold near its recent highs as the market assesses ongoing economic conditions.
What could change it:
• Upside risk: Continued strong inflation data in Australia leading to more aggressive RBA tightening.
• Downside risk: Any adverse geopolitical developments that impact risk appetite and commodity prices could weaken the AUD.