SGD/USD Outlook:
The SGD/USD exchange rate is slightly positive but likely to move sideways as it currently trades above its recent average, although lacking a clear driver for further gains.
Key drivers:
- Rate gap: The Monetary Authority of Singapore has recently eased its monetary policy pace, while the Federal Reserve signals stronger interest rates due to economic resilience, widening the interest rate differential and supporting USD strength.
- Risk/commodities: Recent geopolitical tensions, including potential military actions in the Middle East, have increased safe-haven demand for the USD, which can put pressure on the SGD.
- One macro factor: Despite global trade tensions, Singapore's GDP growth showed resilience at 4.3%, indicating some economic strength that helps keep the SGD afloat.
Range:
Expect the SGD/USD to move within the stable range it has maintained, likely drifting without significant momentum.
What could change it:
- Upside risk: A shift in monetary policy by the Monetary Authority of Singapore that strengthens the SGD could support a stronger exchange rate.
- Downside risk: An unexpected worsening of global trade relations, particularly with the U.S., could dampen SGD performance against the USD.
