USD/SGD – US Numbers Disappoint, Singapore Retail Sales Falter

USD/SGD continues to have an uneventful week, as the pair trades slightly above the 1.42 line in Friday’s European session. The week wrapped up on a disappointing note in Singapore, as Retail Sales posted a sharp decline of 3.7%. US key releases disappointed on Friday, as Retail Sales and PPI both fell short of expectations. Retail Sales came in at 0.1%, while Core Retail Sales was only marginally better, with a small gain of 0.2%. PPI came in at -0.4%, as the manufacturing inflation indicator posted a second straight decline. The weak reading underscores persistently weak inflation levels in the US economy. We’ll get a look at UoM Consumer Confidence later in the day.

The Singapore dollar remains under pressure and has lost some 400 points against the greenback since mid-October. Currently, the Sing is trading close to 5-month lows against the US dollar. Singapore released an awful Retail Sales on Friday, posting a drop of 3.7% for September, compared to a gain of 5.4% a month earlier. This key indicator is closely watched by analysts since it is the primary gauge of consumer spending. Earlier this week, 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 dip in the indicator needn’t be a cause for concern for traders, since given the fact that the US dollar has posted broad gains 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.

A worldwide glut of crude oil continues to push prices to lower levels, with daily losses over the past seven days. Oil touched the $50 level in mid-October, but has struggled since then, with the price of a barrel currently under $42, its lowest level since August. Will the current slide break through the symbolic $40 level? With China and other emerging markets gripped by an economic slowdown, the demand for oil has softened. This has led to a worsening “transit glut”. Land storage facilities are at full capacity and some 100 million barrels of crude oil and heavy fuels are being held at sea, leading to tankers full of crude mired in long lines outside of oil hubs around the globe, such as the US, China and Singapore. At the same time, if the Federal Reserve raises rates next month, such a dramatic move would mark a strong vote of confidence in the US economy, and positive market sentiment could translate into actual economic growth which would increase the demand for oil and raise slumping oil prices.

The recent Fed policy statement hinted at a December rate hike, and this has understandably fueled market speculation about a rate hike in December. At the same time, the Fed has been split over a rate hike for quite some time, and many members will be hesitant to vote in favor of raising rates unless they are confident that the US economy can withstand an interest rate hike. Employment numbers out of the US have certainly improved, with recent indicators such as the unemployment rate pointing to close to full employment in the US economy. Key US releases on Friday, led by Retail Sales, will be closely watched by the markets and the Fed, and the strength of these readings will play a significant role in the Fed’s decision-making process ahead of the critical December monetary policy meeting.

USD/SGD Fundamentals

Friday (Nov. 13)

• 13:30 US Core Retail Sales. Estimate 0.4%. Actual 0.2%
• 13:30 US PPI. Estimate +0.2%. Actual -0.4%
• 13:30 US Retail Sales. Estimate 0.3%. Actual 0.1%
• 13:30 US Core CPI. Estimate 0.1%.
• 15:00 US Preliminary UoM Consumer Sentiment. Estimate 91.3 points
• 15:00 US Business Inventories. Estimate 0.1%. Actual -0.3% 
• 15:00 US Preliminary UoM Inflation Expectations
• 15:30 US Natural Gas Storage. Estimate 51B

*Key releases are highlighted in bold

* All times are GMT

USD/SGD for Friday, November 13, 2015

USD/SGD November 13 at 12:25 GMT

USD/SGD 142.14 H: 142.29 L: 141.72

USD/SGD Technical

• USD/SGD was flat in the Asian session and has posted small gains in the European session.
• 1.4139 is an immediate support level.
• 1.4248 is under strong pressure and could break during the day.
• 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.