USD/SGD – Sing Subdued as US Consumer Inflation Misses Forecast

USD/SGD is showing limited movement on Wednesday, as the pair trades just below the 1.44 line in the North American session. In economic news, CPI posted a weak reading of 0.1%, short of the estimate of 0.0%. Building Permits dipped in December, but managed to beat expectations.

Weak US inflation indicators remain a concern for Federal Reserve policymakers, who must decide whether another rate hike would be appropriate in early 2016. This was underscored on Wednesday, as key inflation numbers missed their estimates. CPI dropped 0.1%, short of the estimate of 0.0%. Core CPI also softened, posting a gain of 0.1%. This was short of the forecast of 0.2%. Will these weak numbers dampen Fed enthusiasm for a rate hike? There is speculation that the Fed could make a move in March, contingent on the US economy continuing to show strong numbers. At the same time, minutes from the Federal Reserve Policy meeting in December indicated that some policymakers are concerned that the inflation picture may not improve anytime soon, and it would be premature to raise rates again before inflation levels improve.

The Singapore dollar has endured a rough January, losing 200 points. USD/SGD is currently trading at its highest levels since September 2009. The Sing has joined other minor currencies like the Australian and Canadian dollars, which have been hammered by the high-flying US dollar early in 2016. Jittery investors have nervously watched as China, the world’s second largest economy, continues to show signs of slowdown. Chinese GDP for the fourth quarter showed another drop, as the key indicator dipped to 6.8%, shy of the forecast of 6.9%. Annual GDP for 2015 came in at 6.9%, the weakest gain in 25 years. A softer Chinese economy and plunging oil prices are having major repercussions in the global stock markets and currency markets, and minor currencies like the Sing could continue to slide.

USD/SGD Fundamentals

Wednesday (Jan. 20)

• 8:30 US Building Permits. Estimate 1.20M. Actual 1.23M
• 8:30 US CPI. Estimate 0.0%. Actual -0.1%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
• 8:30 US Housing Starts. Estimate 1.19M. Actual 1.15M

Upcoming Key Events

Thursday (Jan. 21)

• 8:30 US Philly Fed Manufacturing Index. Estimate -3.1 points
• 8:30 US Unemployment Claims. Estimate 281K

*Key events are in bold

*All release times are EST

USD/SGD for Wednesday, January 20, 2016

USD/SGD January 20 at 11:30 GMT

Open: 143.71 Low: 1.4359   High: 144.12 Close: 143.91

USD/SGD Technical

• 1.4368 is a weak support line
• There is resistance at 1.4459
• Current range: 1.4368 to 1.4459

Further levels in both directions:

• Below: 1.4368, 1.4248 and 1.4139
• Above: 1.4459, 1.4530, and 1.4682

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