USD/SGD continues to rally on Wednesday and has gained about 90 points on the day. The pair is trading at the 1.4340 level in the European session. On the release front, Singapore will publish Foreign Currency Reserves. In the US, there are a host of key releases on the schedule, highlighted by the FOMC Minutes and ADP Nonfarm Payrolls.
The Singapore dollar has started the New Year on a sour note, losing close to 300 points in the past week. USD/SGD is currently trading at its highest levels since early October, as the US dollar continues to hammer risky currencies such as the Singapore dollar. Why are investors snapping up the safe-haven US dollar? Firstly, investors’ appetite for risk has waned following the release of weak Chinese manufacturing data in the world’s second largest economy. Chinese Caixin Manufacturing PMI softened in December, as the key indicator slipped to 48.2 points in December, short of the forecast of 48.9 points. The PMI broke above the 50-point level only once in all of 2015, pointing to ongoing contraction in the Chinese manufacturing sector, another indication that the slowdown in China continues, which is bad news for minor currencies such as the Singapore dollar. Making matters worse, another crisis in the volatile Middle East may be brewing between two major oil producers, as Saudi Arabia abruptly cut off relations with Iran following a violent protest which damaged the Saudi Arabian embassy in Tehran.
The Federal Reserve will again find itself on center stage on Wednesday, with the release of the minutes of the momentous December policy meeting. At that meeting, the Fed opted to raise interest rates for the first time in over nine years, by 0.25 percent. The Fed has hinted that the December move will kick-off a series of incremental hikes in 2016, and the markets will be looking for confirmation, or at least a hint that this is the Fed’s monetary strategy. We’ll also get a look at employment data, with the release of the ADP Nonfarm Payrolls, which precedes the official Nonfarm Payroll report later in the week. As well, the US will release the ISM Non-Manufacturing PMI and Trade Balance. The markets will thus have plenty of data to sift through later today, so we could see some more movement in the currency markets during the North American session.
Wednesday (Jan. 6)
- 13:15 US ADP Non-Farm Employment Change. Estimate 193K
- 13:30 US Trade Balance. Estimate -44.0B
- 14:45 US Final Services PMI. Estimate 55.1 points
- 15:00 US ISM Non-Manufacturing PMI. Estimate 56.0 points
- 15:00 US Factory Orders. Estimate -0.2%
- 15:30 US Crude Oil Inventories. Estimate 0.7M
- 19:00 US FOMC Meeting Minutes
Upcoming Key Events
Thursday (Jan. 7)
- 9:00 Singapore Foreign Currency Reserves
USD/SGD for Wednesday, January 6, 2016
USD/SGD January 6 at 11:10 GMT
USD/SGD 143.40 H: 143.57 L: 142.45
- USD/SGD posted sharp gains in the Asian session, and has been uneventful in European trade.
- 1.4248 has strengthened in support
- 1.4368 has weakened in resistance as the pair continues to climb
- Current range: 1.4248 to 1.4368
Further levels in both directions:
- Below: 1.4248, 1.4139 and 1.4073
- Above: 1.4368, 1.4459 and 1.4530