Bias: The SGD/TWD shows a bullish-to-range-bound bias as it 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 eased the policy stance, which could weaken the SGD relative to the TWD, where Taiwan's central bank remains cautious amid growing AI investments.
- Risk/commodities: Recent increases in oil prices may lead to higher demand for the SGD from commodity-related markets, supporting its strength against the TWD.
- One macro factor: China's slowing economic recovery raises concerns for Taiwan's export opportunities, which may limit the TWD's upward momentum.
Range: The SGD/TWD is likely to hold within the recent range as both currencies navigate economic uncertainties.
What could change it:
- Upside risk: A sudden surge in Singapore's economic growth that boosts the SGD against the TWD.
- Downside risk: An unexpected escalation in trade tensions impacting Taiwan's export outlook, potentially weakening the TWD.
