Bias: The Australian Dollar to Singapore Dollar (AUD/SGD) is bullish-to-range-bound, currently above its 90-day average and positioned in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of Australia is signaling potential interest rate hikes, contrasting with Singapore's more accommodative monetary policy, which may support the AUD.
• Risk/commodities: Falling oil prices impact demand for Australian exports like iron ore, contributing to pressure on the AUD.
• One macro factor: Softer-than-expected inflation in China raises concerns about demand for Australian goods, potentially weighing on the AUD’s performance.
Range: The AUD/SGD is likely to drift within its recent range, maintaining stability as it fluctuates around current levels.
What could change it:
• Upside risk: Strong domestic data releases in Australia could bolster the AUD against the SGD.
• Downside risk: Further deterioration of China’s economic outlook could exert additional pressure on the AUD.