AUD/SGD Outlook: Slightly positive, but likely to move sideways as the rate is currently above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia's cautious stance contrasts with the steady approach of the Monetary Authority of Singapore, maintaining AUD strength.
• Risk/commodities: Increased commodity prices have recently supported the Australian dollar, but volatility remains in response to fluctuating risk appetite.
• One macro factor: The upcoming rise in Australia's producer price index could reinforce predictions for a rate hike, encouraging further AUD support.
Range: Expect AUD/SGD to hold within its recent 3-month bracket, as it does not appear poised to test extremes currently.
What could change it:
• Upside risk: A stronger-than-expected economic report from Australia could lead to more significant support for the AUD.
• Downside risk: If global economic shocks or trade tensions escalate, it could weaken demand for the AUD.