SGD / HKD Technicals – SGD weakness pushing bearish breakout lower

SGD has been weakening against USD since 2013, but one would be forgiven for not appreciating the degree of weakness as JPY and AUD, 2 most commonly traded crosses against the SGD after the USD, have respectively weaken as well, masking SGD deficiencies. However, if we pair SGD against its Hong Kong counterpart, the weakness becomes apparent.  SGD started the year with 6.34 HKD per dollar, and we’re almost 1000 pips below with HKD trading 6.24 against the Sing now. Part of the reason is the fact that Hong Kong’s economy, which is mostly finance/banking based, benefited greatly with bullishness in the markets. However that does not tell the full story, as HKD weakened against the USD instead, despite the latter being a traditional safe haven currency. A lot of the blame on SGD/HKD slide must be placed on Singapore’s end. Singapore is not enjoying the same economic recovery despite being a net exporter in electronic and high tech goods. Singapore’s own manufacturing fundamentals do not look good, and SGD is hurting as a result.

Hourly Chart

Price has pushed below 6.27 and 6.26 within 3 days, with the drop post 6.26 looking similar to the decline we’ve seen last Friday. Price has seen some reprieve from 6.24, with stochastic showing a potential short-term bottom. However bearish trend is still the theme of the day, if not the week, and we could still see returning of selling by the 6.25 interim resistance or 6.26 level.

Daily Chart

Daily chart shows 6.28 being broken with the recovery failing to breach back into the 6.28 – 6.36, confirming bearish bias. Though stochastic is heading into the Oversold region, there is no evidence that bearish momentum is stopping. Next possible pit stops for bears is around 6.22 where there is a cluster consolidation area, before next level of support around 6.18.

It is interesting to see SGD/HKD going lower even without HKD breaking the 7.75 floor. Should HKMA choose to revalue the USD/HKD trading band, a push back to 5.90 will not be out of reach.

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