USD/SGD – Sing Rally Continues, US Jobless Claims Dips

USD/SGD continues to lose ground on Thursday, as the pair trades at 1.4140 in the North American session. In economic news, Unemployment Claims improved to 271 thousand, very close to the estimate of 272 thousand. The Philly Fed Manufacturing Index beat the estimate, coming in at 1.9 points. There are no Singapore releases on the schedule. On Wednesday, the Federal Reserve released the minutes of its most recent policy meeting, as the markets prepare for a possible rate hike in December.

The Federal Reserve minutes of the October 28 policy meeting were highly anticipated, as the guessing game about a Fed rate continues. However, there were no surprises from the Fed, and the markets didn’t show much movement after the release. At the meeting, a majority of Fed members said they were in favor of a rate hike in December. The minutes also noted that employment numbers had weakened in recent months, but analysts pointed out that this was prior to the stellar Nonfarm Payrolls report in October. On the inflation front, the minutes stated that Fed policymakers were confident that inflation would remain at stable levels.

The Fed minutes were non-committal regarding a December rate hike, but most analysts believe that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month. Chris Rupkey, chief financial economist at Bank of Tokyo Mitsubishi, Japan’s largest bank, said he would be “astounded” if the Fed did not raise rates at their next meeting on December 16, especially in light of the strong Nonfarm Payrolls report in October. One major weak spot in the economy is that of weak inflation levels, and the Fed has repeatedly stated that inflation is a prime factor in its decision-making process. Last week’s PPI was awful, posting a second straight decline. On Tuesday, CPI and Core CPI posted small gains of 0.2%, matching the forecast. Are these lukewarm readings enough to convince a majority of Fed members to vote in favor of a hike? Time will tell. Another important factor which must be remembered is that the markets now seem prepared for a small hike of 0.25% or 0.50%, and there is a growing view that a modest move would not cause unwanted turbulence on the global markets.

The US economy continues to show improvement in most areas, but the manufacturing sector continues to lag behind. There was some positive news on Thursday, as the Philly Fed Manufacturing Index posted a small gain of 1.9 points, beating the estimate of 0.1 points. It marked the indicator’s first gain after two consecutive declines. Earlier this week, the Empire State Manufacturing Index posted its fourth straight decline, underlining worsening conditions in the manufacturing sector. In November, the indicator came in at -10.7 points, weaker than the forecast of -5.3 points.

There are no Singapore releases this week, but the markets will get a look at two key events next week. CPI, the primary gauge of consumer inflation, will be released on Monday, followed by GDP on Tuesday. USD/SGD has lost about 100 points this week, and if the currency doesn’t collapse on Friday, it will mark the first weekly gain for the Sing in the past four weeks.

USD/SGD Fundamentals

Thursday (Nov. 19)

• 13:30 US Unemployment Claims. Estimate 272K. Actual 271K
• 15:00 US Philly Fed Manufacturing Index. Estimate 0.1 points. Actual 1.9 points
• 15:00 US CB Leading Index. Estimate 0.5%. Actual 0.6%
• 15:30 US Natural Gas Storage. Estimate 23B. Actual 15B
• 17:30 FOMC Member Dennis Lockhart Speaks
• 21:45 FOMC Member Stanley Fischer Speaks

*Key releases are highlighted in bold

* All times are GMT

USD/SGD for Thursday, November 19, 2015

USD/SGD November 19 at 16:05 GMT

USD/SGD 141.41 H: 142.06 L: 141.30

USD/SGD Technical

• USD/SGD has posted losses throughout the day.
• On the downside, 1.4139 remains under strong pressure.
• On the upside, 1.4248 has some breathing room as the pair continues to move lower.
• 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.