Singapore’s Fixed Asset Investments reached S$16 Billion ( US$13 Billion) in 2012, rising above 2011’s S$13.7 billion. According to the Economic Development Board of Singapore, when the S$16 Billion investments are implemented, they’ll create a record S$20.3 billion in value-add and create 18,600 new jobs.
Not all is good news though, with companies spending lesser on operating expenditures, dropping from S$7.3 billion in 2011 to S$6.2 in 2012. This decline is attributed to uncertainty over global economy, which is expected to continue into 2013. In light of this, 2013’s Fixed Asset Investments is estimated to be between S$11 and S$13 billion, lower than 2011 figures but potentially creating 19,000 to 22,000 jobs.
USD/SGD rallied significantly during today’s Asian trade, in line with the weakened Singapore outlook. It is important to note however that price was already rallying before EDB’s announcement. Looking at the chart, it also seems that the rally has already started last week, with today’s news simply adding onto the bullish momentum, rather than being the catalyst that started the rally. Should the theme of Singapore’s economy weakening continues in 2013, it is not hard to imagine USD/SGD potentially pushing up higher to test 38.2%% Fib first, before testing 50.0%, with a scenario of bullish reversal potentially in the works to bring us back to the beginning of the decline should the 50.0% Fib is broken.
On the other hand, if current 23.6% Fib holds, we may be led to the low of 1.215 once more with a possibility of continuation of bear trend to bring us to the historical low of 1.2 first with possibility of USD/SGD carving even lower. Even with QE3 and higher FAIs, USD/SGD wasn’t able to test 1.20 last year, making such scenario in 2013 harder with a lower expected FAI without any other catalysts such as US default or MAS raising SGD trading band, which are equally unlikely themselves.