SGD/USD Outlook: The outlook is slightly positive, but likely to move sideways, as the rate is above its recent average yet lacks a clear driver for further growth.
Key drivers:
• Rate gap: The Singapore Dollar (SGD) benefits from a stable monetary policy from the Monetary Authority of Singapore, while the US Dollar (USD) faces headwinds from potential rate cuts by the Federal Reserve.
• Risk/commodities: Current geopolitical tensions, including US military actions, have contributed to a weakening trend in the US dollar, creating additional downward pressure.
• One macro factor: The MAS has raised its inflation forecasts for Singapore, suggesting that higher inflation may support the SGD in the medium term.
Range: The SGD/USD is likely to hold within its recent range, with potential for drifting but not testing extremes.
What could change it:
• Upside risk: A significant announcement regarding US economic policies or Fed interest rates could bolster the SGD against the USD.
• Downside risk: Continued geopolitical tensions resulting in market volatility may further weaken the USD, impacting this currency pair.
