The USD/SGD has climbed back to values seen in the middle of August as financial institutions brace for a slew of U.S economic data near-term and next week’s U.S Presidential election.
- Speculators who feel the need to trade in the current Forex conditions, including the USD/SGD need to understand that increased volatility is almost assured in the coming days.
- The USD/SGD has gone from nearly 1.27900 seen late in September and up to almost 1.32400 as of this writing.
- While the move upwards might be described simply as a reaction to unknowns regarding U.S Federal Reserve interest rate policy to come, it is much more complex – yet amazingly day traders can keep things simple.
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Risk management over the next week and a half needs to guard against sudden price velocity, violent reversals and trading volumes that speculators and even financial institutions are often not experienced. The U.S will release Advance GDP tomorrow, inflation statistics on Thursday, and important jobs numbers on Friday. Yet, because of the U.S election next Tuesday and the Fed’s FOMC Meeting two days later, a turbulent amount of unknown winds may blow in Forex. The USD/SGD will not be immune to the strong storms coming in Forex. Choppiness will be seen in the USD/SGD.
The USD/SGD Higher Ratios and Cautious Results Correlate
USD/SGD traders need to accept that the upwards drift which has proven strong and incrementally impressive since the end of September has been experienced in most major currencies paired against the USD. Financial institutions are buying the USD in droves because they are risk adverse. The simple notion that a lack of clarity exists regarding the U.S election and coming Federal Reserve policy is easy to understand. The Singapore Dollar is weaker like most other major currencies against the USD for the moment.
U.S economic data in the coming days will be important, but even if it is favorable regarding the potential of the Fed to remain dovish not only next week, but over the next few months, the unknowns regarding the U.S election will still cause some caution. Yes, some financial institutions may be willing to bet on USD/SGD forward cash positions, but this will be limited. This means the USD/SGD may remain within territory that continues to look overbought in the near-term.
Day Trader Assumptions are Dangerous Now
Technically the USD/SGD exchange pair is certainly traversing within values that appear to be too high, but financial institutions continue to create upwards momentum. The short-term is likely to continue a display of rather conservative Forex trading, meaning that USD centric strength may continue to flourish. Growth numbers from the U.S have been stronger the past couple of months, this may feed into a bit more buying into tomorrow. Looking for strong reversals lower may feel appealing, but it may be wishful thinking in the short-term.
- Because of the rather nervous conditions in the market, day traders should not assume economic data will create easy to identify trends.
- Instead they should watch where momentum shifts occur via their technical charts which are being caused by large players positioning for not only the short-term but for next week’s unknowns.
- Traders need to be extremely cautious in the near-term.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.32430
Current Support: 1.32350
High Target: 1.32710
Low Target: 1.32260
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