USD/SGD – Sing Steady as Markets Await Federal Reserve Meeting

USD/SGD is showing limited movement on Wednesday, as the pair trades at 1.4280 in the European session. In economic news, all eyes are on the Federal Reserve, which will release a policy statement and set the benchmark interest rate for January. The US will also release New Home Sales, with the markets expecting the indicator to improve to 501 thousand. On Thursday, we’ll get a look at employment numbers. Singapore will release the unemployment rate, while the US will release Unemployment Claims.

Singapore inflation remains in negative territory, as CPI came in at -0.6% in December, slightly better than the November reading of -0.8%. Annual Core CPI for 2015 posted a weak gain of 0.5%, compared to 1.9% in 2014. The Singapore central bank does not expect inflation to improve significantly in 2016, which does not bode well for the economy. On Thursday, Singapore will release the unemployment rate. The previous reading came in at an even 2.0%, and the rate is unlikely to show much movement.

Janet Yellen and Company are in the spotlight on Wednesday, as the Federal Reserve concludes a two-day meeting and issues a policy statement. The Fed is expected to maintain interest rates at the current level of 0.25%. Economic conditions have changed significantly since the Fed raise rates in mid-December, with global stock markets down and oil prices sharply lower since the historic rate hike in December. According to Morgan Stanley Morgan chief economist Ellen Zentner, financial conditions have tightened by the equivalent of four rate hikes, so the Fed could hold off from further tightening until mid-2016 or even later. The January statement could well be a balancing act, with the Fed acknowledging weaker economic conditions in the US while emphasizing that the economy is still growing and moving in the right direction. The collapse of oil prices has contributed to the weak inflation picture in the US, with current inflation levels well below the Fed target of 2.0%. Low inflation, indicative of slack in the economy, remains a significant concern for Fed policymakers, who are unlikely to approve another rate hike without an upturn in inflation. Traders should be prepared for possible volatility in the currency markets following the Fed policy statement.

USD/SGD Fundamentals

Wednesday (Jan. 27)

  • 10:00 US New Home Sales. Estimate 501K
  • 10:30 US Crude Oil Inventories. Estimate 3.8M
  • 14:00 FOMC Statement
  • 14:00 Federal Funds Rate. Estimate <0.50%

Upcoming Key Events

Thursday (Jan. 28)

  • 8:30 US Core Durable Goods Orders. Estimate 0.0%
  • 8:30 US Unemployment Claims. Estimate 281K
  • 9:30 Singapore Unemployment Rate

*Key events are in bold

*All release times are EST

USD/SGD for Wednesday, January 27, 2016

USD/SGD January 27 at 8:10 EST

Open: 1.4256 Low: 1.4239  High: 142.90 Close: 142.77

USD/SGD Technical

S3 S2 S1 R1 R2 R3
1.4016 1.4139 1.4248 1.4368 1.4459 1.4530
  • USD/SGD has shown limited movement in the Asian and European sessions
  • 1.4368 remains a strong resistance line
  • 1.4248 is a weak support line and was tested earlier in the day
  • Current range: 1.4248 to 1.4368

Further levels in both directions:

  • Below: 1.4248, 1.4139 and 1.4016
  • Above: 1.4368, 1.4459, 1.4530, and 1.4682

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.