USD/SGD – Greenback Rally Continues, Singapore Foreign Currency Reserves Dip

USD/SGD continues to move higher on Monday, as the pair trades at 1.4250 in the North American session. It’s a quiet start to the week, with just one US event on the schedule. Labor Market Conditions Index came in 1.6 points. In Singapore, the central bank released Foreign Exchange Reserves for October, and the reading of S$249.80 billion was slightly lower than the previous month.

The Singapore dollar continues to lose ground, as the currency finds itself at 4-week lows against its US counterpart. USD/SGD has posted gains for five consecutive days, and has jumped almost 500 points since mid-October. To be fair, the Sing is not the only currency which has been pummeled by the US dollar over the past four weeks; the greenback has enjoyed broad gains against its major rivals as well as minor currencies. USD/SGD posted sharp gains on Friday, following a spectacular Nonfarm Payrolls report, which has fueled speculation of a rate hike by the US Federal Reserve.

US employment numbers have looked good in recent readings, but the outstanding Nonfarm Payroll report on Friday surprised the markets. The key indicator jumped to 271 thousand, crushing the forecast of 181 thousand. It was the indicator’s best showing since May. As well, hourly wages were up 0.4%, bringing the annual increase to 2.5%, and the unemployment rate dipped to 5.0%. These excellent readings are further signs that the US economy is close to full employment. The positive news continued on Monday, as the Labor Market Conditions Index gained 1.6 points in October, up from a flat reading of 0.0 points a month earlier.

Given that the Federal Reserve said in its recent policy statement that it employment data would be an important factor in a rate decision, the strong NFP reading has greatly increased the likelihood of a Fed hike. The US dollar posted broad gains as a result, and oil prices dropped for a third straight day on Friday. Still, a Fed rate hike should not be considered a done deal, as not all US releases have been as strong as employment data, such as manufacturing and inflation numbers. Low inflation points to slack in the economy, and the Fed policymakers will need to be assured that the US economy can withstand an interest rate hike before voting in favor of raising rates.

On Monday, data from the MAS, the Singapore central bank, indicated that foreign currency reserves had narrowed to $249.80 billion in October, compared to $251.64 billion. The weaker reading needn’t be a cause for concern for traders, since given the fact that the US dollar has risen sharply in the past month, October’s lower figure in US dollar terms may largely be the result of the greenback’s broad-based appreciation against the other major currencies in the reserves. After a market holiday during the week, we’ll get a look at Singapore Retail Sales on Friday.

USD/SGD Fundamentals

Monday (Nov. 9)

• 8:00 Singapore Foreign Currency Reserves. Estimate S$251.64B. Actual S$249.80
• 15:00 US Labor Market Conditions Index. Actual 1.6 points

*Key releases are highlighted in bold

* All times are GMT

USD/SGD for Monday, November 9, 2015

USD/SGD November 9 at 15:35 GMT

USD/SGD 142.46 H: 142.61 L: 141.97

USD/SGD Technical

• USD/SGD was flat in the Asian session and has posted modest gains in the European session.
• 1.4139 has switched to a support role following further gains by the pair.
• 1.4248 is under strong pressure and could break during the North American session.
• Current range: 1.4139 to 1.4248

Further levels in both directions:

• Below: 1.4139, 1.4073, 1.3900 and 1.3823
• Above: 1.4248, 1.4300 and 1.4395

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.