USD/SGD dips more as US-China relations improve
The minor pair dipped for the eleventh consecutive day, on the back of improved US-China trade sentiment and steady US interest rates.
The USD/SGD pair continues to be bearish, as it falls for the eleventh straight day.
The currency traded 0.09% lower overnight – its sharpest decline across this time period – to open at S$1.35721 this morning from the previous close of S$1.35643, according to IG data.
The pair has broken past its previous resistance zone of S$1.35836, but not before a short-lived rally on Wednesday 11 December that managed to take it north of the 1.36 mark.
This downward trend succeeds the bullishness that was enjoyed for two weeks in late-November.
Year-on-year, the minor is down around seven percent.
Improved trade sentiment; steady interest rates
IG Asia Market Strategist Jingyi Pan said the greenback is weakening because of an improvement in US-China trade sentiment, coupled with the US Federal Reserve’s latest forecast for steady interest rates through until at least end-2020.
On Thursday 12 December, China’s Ministry of Commerce said the economic and trade teams of both countries are in ‘close communication’ regarding a trade agreement.
Fed officials also voted unanimously during Wednesday’s Federal Open Market Committee to keep interest rates at the current range of 1.5% to 1.75% until the end of 2020.
Next phase of movement
It appears that the USD/SGD could possibly dip further, with analysts like JP Morgan Chase & Co.’s Jamie Dimon saying that ‘there will be a phase-one deal’ between the world’s two biggest economies.
‘It will be a negative in the marketplace and a small-negative’ for the US and global economy, he said. ‘People expect this phase-one deal to take place and tariffs not to go up.’
As Pan noted, ‘any re-escalation of the tariffs war or the carrying forth of the trade war to other fronts, would jeopardise Asia markets’ performance’, including forex.
Much of the greenback’s performance in the coming months, and the wider forex market, is increasingly hanging on one date: December 15.
The pair is currently trading on IG at S$1.35644.
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