- I can see that the USD/SGD pair is simply consolidating in a 50 point range.
- This makes a certain amount of sense, due to the fact that it’s the middle of summer, and I do believe that more consolidation is probably along the way.
That being said, you do have to keep in mind that we are in the short term uptrend, and it’s very possible that we can break above the 1.36 level. If we break above there, then it’s possible that we could go looking to the 1.3650 level above, which is an area that previously had been resistance. This is not necessarily a huge move, but that does make a certain amount of sense that we might be quiet due to the fact that we are in the midst of summer, and it looks like we are just simply killing time as traders try to sort out what happens next.
Interest rate differential
The interest rate differential does favor the United States, and it’s probably worth noting that rates have been rising in the bond markets recently, despite the fact that everybody on Wall Street is hoping for rate cuts. Inflation continues to be very difficult, and as long as that’s going to be the case it makes a certain amount of sense that the US dollar will continue to be a winner when it comes to comparing itself against the Singapore dollar.
The Singapore dollar of course is considered to be somewhat of a safety currency, but it’s also tied to Asia. That might be the problem, because if we are going to suddenly see a lack of global growth, Asia is particularly vulnerable to this as most of Asia is still considered to be an emerging market. Singapore is considered to be a major banking center for Asia, so if economic growth continues to struggle, that means that there will be less need for financial services, thereby perhaps working against the SGD overall.
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