Bias: Bullish-to-range-bound, as the SGD is above the 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Monetary Authority of Singapore has adopted a more accommodative monetary stance, while the European Central Bank is expected to maintain a stable policy, impacting the interest rate differences between SGD and EUR.
• Risk/commodities: Oil prices have recently risen, contributing to volatility, which typically strengthens currencies linked to stable energy markets; this may have a favorable impact on SGD.
• One macro factor: The Eurozone's recent underwhelming trade and retail sales data may weigh on the euro's strength, presenting further challenges for its performance against the SGD.
Range: The SGD/EUR pair is likely to maintain its current position but may drift slightly within the recent 3-month range.
What could change it:
• Upside risk: A significant improvement in Eurozone economic data could lift the euro, reducing the SGD's edge.
• Downside risk: Continued weak economic performance in the Eurozone could further support the SGD, keeping the euro under pressure.
