Bias: The USD/SGD is currently near the 90-day average and positioned in the middle of its 3-month range, suggesting a range-bound outlook.
Key drivers:
• Rate gap: The Federal Reserve is expected to adopt a more dovish stance with potential rate cuts this year, which may weaken the USD against the SGD.
• Risk/commodities: Recent geopolitical tensions, including airstrikes in Venezuela, may create volatility in the USD as investors react to global risks.
• One macro factor: The Monetary Authority of Singapore has signaled a more accommodative monetary policy, which supports the SGD amid uncertainty in trade tensions.
Range: The USD/SGD is likely to drift within the recent range, showing limited movement in the current market context.
What could change it:
• Upside risk: A stronger-than-expected US labor market report could boost USD demand.
• Downside risk: If Federal Reserve officials deliver dovish comments, the USD could weaken further against the SGD.