The USD/SGD pair initially fell during the course of the day on Tuesday, but ended up bouncing back above the 1.40 level. We did up forming a bit of a hammer, and that of course is a very bullish sign in general, but it is even more so when you start to see it at a large, round, psychologically significant number such as the 1.40 handle. With this, and the fact that we have seen support previously at this area, it appears that the market should start to find buyers again.
On a break above the top of the hammer from the Tuesday session, as well as the Monday session, I believe that this market should continue to go higher, reaching towards the 1.43 level. That was the top of the previous consolidation area, so really I am not looking for any type of major move, just a continuation of what we have seen over the last couple of months.
Singapore and its relationship to Asia
The Singapore dollar of course is used for financing construction projects and as a result it is very sensitive to what’s going on in Asia overall, especially when it comes to grow. The Singapore dollar is a bit like the Swiss franc in the sense that it is considered to be a “safety currency”, but only in the realm of Southeast Asia and places like Indonesia, not necessarily on a global scale. With this, it appears that money is flowing from Asia and towards North America, which is exactly what you would anticipate with the recent lack of economic strength coming out of places like China.
It is not until we break down below the 1.3850 level that I would feel comfortable selling this pair. At that point in time though, I would anticipate that we have seen a bit of a trend change. I don’t really think that’s going to happen, so this point in time I am fully expecting to start buying again.
