AUD/SGD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia has hinted at potential interest rate hikes, while the Monetary Authority of Singapore has adopted a more accommodative policy stance, creating a supportive environment for the AUD.
• Risk/commodities: The performance of AUD remains strong, even as demand for Australian exports, particularly iron ore, has been affected by China's uneven economic recovery.
• One macro factor: Upcoming Australian inflation data is anticipated to drive interest rate expectations, which could influence the AUD positively.
Range: The AUD/SGD is likely to hold within its recent range, drifting slightly rather than testing extremes.
What could change it:
• Upside risk: A significant rise in Australian inflation could prompt increased demand for the AUD.
• Downside risk: Renewed concerns over global economic conditions could increase pressure on the AUD, especially if commodity prices drop.
