USD/SGD Turns Higher From key Level
USD/SGD is firmer on Monday as the Singapore dollar’s rally runs aground after data shows the Asian nation’s economy is growing less than expected.
The Gross domestic Product (GDP) release on Thursday revealed Singapore’s economy grew less than expected in the second Quarter. Subsequently, the government also cut the annual growth forecast, citing threats to the global outlook from the Ukraine crisis.
GDP grew 4.4 percent (YoY) in the three months leading to July, below the 4.8 percent the government predicted. Gabriel Lim, secretary of the Ministry of Trade and Industry (MIT) told reporters:
“Downside risks in the global economy remain significant … further escalations in the Russia-Ukraine conflict could worsen global supply disruptions and exacerbate inflationary pressures through higher food and energy prices,”.
Following the disappointing GDP data, the MTI downgraded its 2022 growth forecast from 3-5 percent to 3-4 percent. However, Yong Yik Wei, chief economist of the MTI downplayed recession fears, telling the media:
“Our current baseline is that GDP will return to a slight positive [quarter-on-quarter] growth in the third and fourth quarter of this year,”.
Nonetheless, the Singapore dollar slipped following the GDP miss. Furthermore, technical analysis points to more weakness against the US dollar in the days ahead.
US Dollar to Singapore Dollar Outlook
Turning to the daily chart, we see USD/SGD is finding support at the 200-Day Moving Average around 1.3680 (red line). Crucially, despite piercing the indicator on Thursday, the pair closed above it. As a result, the greenback should continue to recover in the near-term. In light of this, a logical target is the 100-DMA at 1.3806 (blue line).
Notably, the Relative Strength Index (RSI) is turning higher from an oversold reading, indicating bullish momentum is picking up. With this in mind, USD/SGD should pull clear from the 200-DMA in the coming sessions.
By contrast, a close below the 200-DMA would threaten the bullish outlook. Should this play out, a slide towards the April lows approaching 1.3500 is possible. For now however, the US dollar bulls are back in the driving seat.
USD/SGD Exchange Rate Chart
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