USD/SGD – Greenback Lower as US Manufacturing PMI Disappoints

USD/SGD has posted slight losses on Tuesday, continuing the trend which started a day earlier. In the North American session, the pair is trading at 1.4070. In the US, ISM Manufacturing PMI, the day’s key event, disappointed with a reading of 48.6 points, missing expectations. There are no Singapore releases this week.

US manufacturing data has been anything but impressive in recent readings, and this was underlined by a soft reading from ISM Manufacturing PMI. The key index slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction from the index since May 2013. Manufacturing data in October was also soft – the Empire State Manufacturing Index posted a dismal reading of -10.7 points, worse than the estimate of -5.3 points. This marked a fourth straight decline by the important indicator. As well, Philly Fed Manufacturing Index posted a weak gain of 1.9 points. This negative trend points to trouble in the manufacturing sector, and could weigh on the US dollar.

With the US economy generally producing strong data, in particular employment numbers, speculation has increased that the Federal Reserve will change course and raise interest rates for the first time in ten years. Unemployment Claims were down sharply last week, and even a lukewarm Nonfarm Payroll report late in the week is unlikely to present an obstacle for the Fed. At the same time, there is a serious concern over low inflation levels, as the Fed has noted in the past that inflation is an important factor in the rate decision process. We’ll get a look at one more round of CPI and PPI reports prior to the Fed policy meeting on December 16, and these releases could cause some volatility in the markets if they are not close to the estimates. Meanwhile, the guessing game continues, and the markets will be closely following every key release and comments from Fed members in the two weeks leading up to the critical December policy meeting.

USD/SGD Fundamentals

Tuesday (Dec. 1)

• 14:45 US Final Manufacturing PMI. Estimate 52.6 points. Actual 52.8 points
• 15:00 US ISM Manufacturing PMI. Estimate 50.6 points. Actual 48.6 points
• 15:00 US Construction Spending. Estimate 0.5%. Actual 1.0%
• 15:00 US ISM Manufacturing Prices. Estimate 40.0 points. Actual 35.5 points
• All Day – Total Vehicles Sales. Estimate 18.0M
• 16:45 US FOMC Member Charles Evans Speaks

Upcoming Key Events

Wednesday (Dec. 2)

• 13:15 ADP Nonfarm Employment Change. Estimate 191K
• 17:25 Fed Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are GMT

USD/SGD for Tuesday, December 1, 2015

USD/SGD December 1 at 18:00 GMT

USD/SGD 140.74 H: 141.18 L: 140.59

USD/SGD Technical

• 1.4139 has strengthened as the pair trades at lower levels.
• 1.4073 was tested earlier and remains under strong pressure.
• Current range: 1.4073 to 1.4139

Further levels in both directions:

• Below: 1.4073, 1.3937 and 1.3810
• Above: 1.4139, 1.4248, 1.4300 and 1.4395

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