USD/SGD Outlook: Likely to decrease, consistent with its position below the recent average and near recent lows.
Key drivers:
- Rate gap: The Federal Reserve is expected to implement rate cuts soon, while the Monetary Authority of Singapore has adopted a more accommodative stance, leading to downward pressure on the USD.
- Risk/commodities: As Brent Crude OIL/USD remains volatile, it could impact the trade balance and investor confidence in both currencies.
- One macro factor: Singapore's GDP growth is projected to moderate, but resilience in economic performance may support the SGD.
Range: USD/SGD is likely to drift within its recent 3-month range, showing limited volatility given its current low position.
What could change it:
- Upside risk: A significant positive surprise in US labor market data could lead to a stronger USD.
- Downside risk: Heightened geopolitical tensions could weigh further on the USD, leading to more selling pressure.