USD/SGD – Sing Unchanged, Markets Eye US and Singapore Retail Sales

USD/SGD is unchanged on Tuesday, as the pair trades at 1.3560. In economic news, both the US and Singapore will release retail sales reports on Tuesday. US retail sales is expected to post a gain of 0.4%, while the forecast for Singapore Retail Sales stands at -1.4%. On Wednesday, the Federal Reserve will release its rate statement.

The markets are keeping a close eye on the Federal Reserve’s policy meeting, which will conclude with a rate statement on Wednesday. The markets have written off a rate hike in June, while a July move remains unlikely, according to the CME Group. The chances of a June hike are just 1.9% compared to a 26.3% in May. The chances of a July hike is 17.9%, compared to 43.2% in May. The sharp drop in market sentiment for a rate hike can be attributed to the dismal US Nonfarm Payrolls report as well as some backpedaling by Fed over the past few weeks. Back in April, Fed chair Janet Yellen had renewed hopes of rate hike in the summer, when she said that she expected a rate hike in “the coming months”. Since then, Yellen has sounded more cautious, and in a recent speech she was careful to avoid a time frame regarding a rate hike. To be fair, the Fed has made a strong effort to communicate clearly with the markets, and has stated that the timing of a rate hike would be data-dependent. With the US economy posting some mixed numbers and inflation levels remaining at low levels, it should not come as a surprise that the Fed may stay on the sidelines until September or even later. Although it’s extremely unlikely that the Fed will make a move in June, the markets will be carefully monitoring the rate statement, looking for some clues regarding a July rate hike.

The Singapore dollar started the week with gains, following a strong Singapore employment report. The unemployment rate came in at 1.9% in the first quarter, unchanged from the fourth quarter of 2015. Singapore’s economy is closely linked to growth trends in China and the Chinese slowdown has had a negative impact on the island-city’s growth. Last week, Chinese CPI was unexpectedly weak in the year-to-year release for May, posting a gain of 2.0%. This was shy of the estimate of 2.3%. Chinese demand appears to have picked up in the second quarter, so the markets are hopeful that this weak inflation number is reflective of the drop in Chinese demand in the first quarter, which had significant negative repercussions for the global economy, and that Chinese inflation will pick up in the second quarter.

USD/SGD Fundamentals

Tuesday (June 14)

• 5:55 US NFIB Small Business Index. Estimate 93.8. Actual 93.8
• 8:30 US Core Retail Sales. Estimate 0.4%
• 8:30 Retail Sales. Estimate 0.4%
• 8:30 US Import Prices. Estimate 0.8%
• 10:00 US Business Inventories. Estimate 0.2%

Wednesday (June 15)

• 1:00 Singapore Retail Sales. Estimate -1.4%
• 8:30 US PPI. Estimate 0.3%
• 14:00 US FOMC Economic Projections
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <0.50%
• 14:30 US FOMC Press Conference

*All release times are EDT

USD/SGD for Tuesday, June 14, 2016

USD/SGD June 14 at 7:20 EDT

Open: 1.3560 Low: 1.3512 High: 1.3571 Close: 1.3558

USD/SGD Technical

• USD/SGD has been choppy in the Asian and European sessions
• 1.3695 is a strong resistance line
• 1.3553 was tested earlier in support and could break during the Tuesday session
• Current range: 1.3553 to 1.3695

Further levels in both directions:

• Below: 1.3553, 1.3443, 1.3279 and 1.3199
• Above: 1.3695, 1.3828 and 1.3939

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