USD/SGD has lost ground on Thursday, as the pair trades at 1.3730 in the North American session. In economic news, Singapore GDP posted a small gain of 0.2% in the first quarter. In the US, Core Durable Goods Orders posted a gain of 0.4%, above the forecast. Unemployment claims fell to 268 thousand, beating expectations. On Friday, the US releases Preliminary GDP and UoM Consumer Sentiment.
Singapore’s economy expanded in the first quarter, but the gain was an unimpressive 0.2%. This follows a flat reading of 0.0% in the fourth quarter of 2015. The economy continues to struggle with weak global demand, and a statement from the Ministry of Trade and Industry on Wednesday noted that “the growth outlook for the advanced economies has deteriorated marginally.” Still, the Ministry is maintaining its forecast of GDP growth of 1 percent to 3 percent in 2016. Meanwhile, year-on-year CPI for April came in at -0.5%, as consumer inflation continues to drop. The April report marked the 18th consecutive month that CPI has declined. This marked the longest stretch of declines since 1977. The Monetary Authority of Singapore expects inflation to rise in the second half of 2016, in part due to the expectation that oil prices will continue to rise in during the year.
US numbers looked sharp on Thursday. Core Durable Goods Orders rebounded with a gain of 0.4%, edging above the forecast of 0.3%. Durable Goods Orders was excellent, jumping 3.4%, crushing the estimate of 0.3%. Unemployment claims, which dropped to 268 thousand, compared to the estimate of 275 thousand. There was more good news on the housing front, as Pending Home Sales posted an excellent gain of 5.1%, crushing the estimate of 0.6%. This marked the indicator’s strongest gain since June 2014.
As little as a week ago, talk of a June rate hike was off the radar, but that has quickly changed after last week’s Fed minutes. The report was more hawkish than expected, and this resulted in strong volatility in the currency markets. It has also renewed market speculation about a June rate hike. Odds of a rate hike in June increased to 40% on Wednesday, compared to just 4% one week ago. Still, the Fed will be hard-pressed to raise rates if key indicators don’t show improvement, particularly inflation numbers. On Monday, FOMC member John Williams reiterated that he expected the Fed to raise rates two or three times in 2016. However, there appears to be a gap between the hawkish message some FOMC members are sending out and market sentiment, as many analysts are projecting only one rate hike this year. The guessing game as to what the Fed has in mind is likely to continue into June, but it’s safe to say that another rate move will be data-dependent, so stronger US numbers will increase the likelihood of a quarter-point hike at the June policy meeting. The Fed will be closely monitoring key events this week, notably GDP and UoM Consumer Sentiment.
Wednesday (May 25)
- 20:00 Singapore GDP. Actual 0.2%
Thursday (May 26)
- Day 1 – G7 Meetings
- 6:10 US FOMC Member James Bullard Speaks
- 8:30 US Core Durable Goods Orders. Estimate 0.3%. Actual 0.4%
- 8:30 US Unemployment Claims. Estimate 275K. Actual 268K
- 8:30 US Durable Goods Orders. Estimate 0.3%. Actual 3.4%
- 10:00 US Pending Home Sales. Estimate 0.6%
- 10:30 US Natural Gas Storage. Estimate 67B
- 12:00 US FOMC Jerome Powell Speaks
Upcoming Key Events
Friday (May 27)
- 8:30 US Preliminary GDP. Estimate 0.8%
- 10:00 US Revised UoM Consumer Sentiment. Estimate 95.7
*All release times are EDT
USD/SGD for Thursday, May 26, 2016
USD/SGD May 26 at 8:25 EDT
Open: 1.3785 Low: 1.3715 High: 1.3788 Close: 1.3727
- USD/SGD was choppy in the Asian and European session. The pair has lost ground in North American trade
- 1.3721 is a weak support line
- There is resistance at 1.3808
- Current range: 1.3721 to 1.3808
Further levels in both directions:
- Below: 1.3721, 1.3639 and 1.3535
- Above: 1.3808, 1.3901 and 1.4043
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