USD to SGD exchange rate down to three-month low
The USD/SGD forex pair has been in a steady decline for more than a week, amid greater market optimism.
The USD continues to weaken against the SGD, falling for a fourth consecutive day to hit a three-month low of S$1.39689.
IG trading data show that the USD/SGD forex duo is down by 1.15% since Saturday 30 May 2020. This is the pair’s lowest level since 11 March.
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USD to SGD decline started over a week back
As evident throughout the Covid-19 pandemic, whenever there is uncertainty and volatility in the markets, the greenback tended to rally with investors preferring to accumulate the safe-haven asset.
Since Monday 25 May 2020, the USD to SGD exchange rate has been in a steady decline, amid hopes of an economic recovery stemming from a potential coronavirus vaccine. The optimism among traders had also managed to overshadow renewed US-China trade tensions for the most part, bar a brief mid-week resurgence.
This latest USD correction is no exception, with sentiments on the upswing again in anticipation of the reopening of the US economy. This is also despite widespread civil unrest in response to recent social and political issues within both the US and China (Hong Kong).
US equity benchmarks S&P 500, Dow Jones Industrial Average and Nasdaq 30 had reflected the optimism, each closing higher on Monday (01 June) and Tuesday (02 June) – continuing from last week’s growth momentum.
USD weakness likely to continue amid risk-on atmosphere
IG Asia market strategist Pan Jingyi noted that moving into the latter half of the week, a risk-on mood will ‘clearly’ remain ‘the picture for Asia’, as markets here will ‘find inspiration from the reopening optimism-driven rally on Wall Street’.
She wrote in a client note that Asian markets will likely remain lifted, as the attention is now turned towards May economic readings – including the upcoming US labour market data on Friday 05 June, with expectations for improvements from April’s lows.
This implies that minor Asian currency pairs like the USD/SGD are also likely to keep edging lower, as investors become more inclined towards riskier asset classes.
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