USD/SGD Outlook:
The USD/SGD is likely to move sideways, as it trades near its recent average in a stable range. Recent increases reflect a strong USD driven by heightened risk aversion from global conflicts, but there is no clear immediate driver for a significant shift in either direction.
Key drivers:
• Rate gap: The US Federal Reserve's tightening cycle contrasts with the Monetary Authority of Singapore's (MAS) strong policy stance, supporting the SGD.
• Risk/commodities: The ongoing conflict in the Middle East boosts the USD as investors seek safety, enhancing its status as a preferred asset.
• One macro factor: Upcoming US ISM services PMI data could impact the USD’s movement, with a positive reading expected to reinforce USD strength.
Range:
USD/SGD is likely to hold within its recent 3-month range of 1.2603 to 1.2977, with no significant breakout expected.
What could change it:
• Upside risk: A sharply positive PMI reading could strengthen the USD further.
• Downside risk: A quick resolution to conflicts in the Middle East may decrease demand for the safe-haven USD.
