USD/SGD Outlook: Slightly positive, but likely to move sideways as the rate is just below its recent average and lacks a clear direction.
Key drivers:
• Rate gap: The Federal Reserve is expected to lower interest rates, while the Monetary Authority of Singapore has already eased its monetary policy, which could weigh on the USD.
• Risk/commodities: Ongoing uncertainty around U.S. tariffs may pressure the USD, impacting confidence in American financial markets.
• One macro factor: Singapore's GDP growth is projected to stabilize near trend levels despite external trade tensions, supporting the SGD.
Range: The USD/SGD exchange rate is likely to hold within its recent range as both currencies face respective pressures.
What could change it:
• Upside risk: A surprise uptick in U.S. labor market data could bolster the USD.
• Downside risk: Escalating geopolitical tensions or further tariff announcements could weaken the USD further.
