In recent weeks, the USD to SGD exchange rate has come under pressure as the US dollar weakened against a backdrop of softening inflation data. Analysts point to a significant decline in the US consumer price index, which fell from 3% to 2.7% in November, prompting expectations for accelerated rate cuts by the Federal Reserve in 2026. Market sentiment has shifted towards a dovish outlook for the Fed, leading to a decreased yield advantage for the USD, which is reflected in the recent trading range of USD to SGD. The rate is hovering near 90-day lows at approximately 1.2841, just 0.9% below its 3-month average of 1.2963.
Forecasters suggest that a combination of mixed US economic data, characterized by slowing growth but a resilient labor market, continues to apply downward pressure on the dollar. Recent reports indicate that while manufacturing indicators reflect weakness and consumer spending is decelerating, the unemployment rate remains low, which has made the Fed cautious about initiating aggressive rate cuts. This environment leads to expectations of the USD remaining range-bound, particularly as traders watch for signals from upcoming consumer sentiment indices and the Federal Open Market Committee's (FOMC) communication.
On the other side, the Singapore dollar has been responding to domestic monetary policy adjustments. The Monetary Authority of Singapore (MAS) has eased its monetary stance in light of lower-than-expected inflation and concerns regarding economic growth. Recent data shows core inflation slowing significantly, which, along with a stabilizing economy despite global trade tensions, has given some support to the SGD. However, the SGD faces headwinds from U.S. tariffs on key exports, including pharmaceuticals and semiconductors, which add to the complexity of its outlook.
Economists suggest that as other major currencies have shown recovery against the USD, this dynamic could lead to further softening of the USD/SGD pairing. With risk sentiment improving and traders shifting towards equities and other risk assets, the outlook remains cautious yet dynamic. Moving forward, significant events such as inflation prints and Fed communications will be crucial for determining future trends in the USD to SGD exchange rate.
