USD/SGD struggles to find stability despite recent rallies
The USD rose to a two-week high against the SGD at the start of this week, but has been unable to keep up the pace.
The USD/SGD pair is struggling to find stability at higher levels, with the minor trading sideways along the S$1.42750 level for the most part of Wednesday 08 April’s day session.
The pair has quickly fallen as much as 1.32% since starting the week at a high of S$1.44114, based on IG trading data. The greenback had briefly dropped to a one-week low of S$1.42210 at 21:00 SGT on Tuesday 07 April.
The US dollar has recovered slightly since the hiccup but has been unable to climb past the S$1.42900 mark – a level that it was traversing above for the latter half of last week.
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‘No signs of stabilisation just yet’ for the USD/SGD
While uncertainty is still an overarching theme for the trading sector, slowing rates of coronavirus infections and deaths in the US and other hotspots over the weekend have also put an abrupt end to what would have been the USD’s second bull sprint in one month.
UOB FX analysts say that ‘while the rapid decline appears to be running ahead of itself, there is no sign of stabilisation just yet’.
‘From here, USD could stage another leg lower towards 1.4190 first before a more sustained recovery can be expected (next support is at 1.4150),’ they wrote in a daily note, adding that current resistance levels are at 1.4280 and 1.4320.
Comparatively, the USD too rose sharply against most G10 currencies on Monday, including the Japanese yen, euro, British pound and Swiss franc, before reversing lower by Tuesday.
USD likely to keep growing against Asian currencies
Even then, with market volatility and uncertainty still looming, as well as ongoing expectations for dismal economic data in the coming weeks, IG Asia market strategist Pan Jingyi says the greenback’s safe-haven appeal is likely to keep growing ‘in favour against most majors and Asian currencies alike in the near-term’.
Earlier last month, the greenback rallied over 6% against the SGD between 09 March and 23 March, as the coronavirus pandemic worsened across the globe, forcing investors and traders alike to look toward the safe-haven asset for some respite.
A correction followed after, taking the US dollar back under 1.42100 by April 1st. Comments by US President Donald Trump regarding an impending oil price war resolution between Saudi Arabia and Russia – which were subsequently refuted by both countries – then fuelled another boost in USD/SGD, with the pair managing to climb past 1.44100 during weekend trading.
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A forex CFD is a contract in which you agree to exchange the difference in price of a currency pair from when you open your position to when you close it. Open a long position, and if the currency pair increases in price you’ll make a profit. If it drops in price, you’ll make a loss. Open a short position, and the opposite is true.
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