USD/SGD Outlook: Likely to decrease as the rate is below its recent average and near recent lows, indicating downward pressure.
Key drivers:
• Rate gap: The Federal Reserve is expected to implement rate cuts, contrasting with Singapore’s more stable monetary policy, which is keeping the SGD relatively strong.
• Risk/commodities: Oil prices have stabilized recently, limiting volatility and reducing pressures on the USD, which is sensitive to commodity movements.
• One macro factor: Singapore's economic growth is expected to moderate to near-trend levels in 2026, helping to support the SGD amidst ongoing global trade tensions.
Range: USD/SGD is likely to drift within its recent range but may test the lower extreme as uncertainties persist.
What could change it:
• Upside risk: A stronger-than-expected core inflation reading in the U.S. could heighten Fed rate expectations, helping the USD.
• Downside risk: Continued geopolitical instability or adverse economic data from the U.S. could apply more pressure on the greenback.
