AUD/SGD Outlook:
The AUD/SGD is likely to move sideways, currently trading significantly above its 90-day average and in the mid-range of its recent 3-month fluctuations. This position indicates a stable yet cautious outlook as geopolitical uncertainties may pressure the Australian dollar.
Key drivers:
• The Reserve Bank of Australia appears more hawkish compared to the Monetary Authority of Singapore, suggesting a potential rate increase for the AUD.
• Oil prices are currently above average, positively affecting the AUD by boosting commodity-exporting sectors.
• Recent geopolitical developments have challenged investor risk appetite, impacting AUD performance.
Range:
The AUD/SGD is expected to drift within its recent range, potentially testing both extremes but likely remaining stable overall.
What could change it:
• Upside risk: An unexpected resolution to geopolitical tensions could bolster the AUD.
• Downside risk: Further weakening of global risk appetite could lead to a drop in the AUD.
Based on DBS Bank and Standard Chartered, they predict the AUD/SGD will settle between 0.88 and 0.91, supported by the structural strength of the SGD under its managed exchange-rate framework.
