SGD/USD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average without a clear driver.
Key drivers:
- Rate gap: The Monetary Authority of Singapore's accommodative policy contrasts with the Federal Reserve's steady interest rates, impacting SGD's strength against USD.
- Risk/commodities: Recent concerns around geopolitical tensions and their effects on global trade have created volatility in the USD, potentially weighing on its value.
- Economic performance: Singapore's robust 5% growth in Q4 2024 is a positive factor for the SGD, but external pressures from U.S. tariffs on imports might limit its momentum.
Range:
Expect the SGD/USD to drift within the recent range, without significant moves in either direction.
What could change it:
- Upside risk: Stronger-than-expected economic indicators from Singapore could boost the SGD further.
- Downside risk: Renewed geopolitical tensions or negative economic data from the U.S. could weaken the USD significantly.
