Jun 23, 2023

The US dollar vs. the Singapore dollar has been trading in a range since 2015; these are the key levels.

USDSGD: Monthly Chart

USDSGD: Monthly Chart

The 1.44 level has capped the USD/SGD forex currency pair since 2016 and has tested that level four times now. The support is at 1.3150, and that has been tested three times. The latest test was in January 2023, and if the US dollar finds support, it could move 1,300 pips to the highs. A breakout in either direction would likely lead to a similar move to the upside or downside.

Senior Economist at UOB Group Alvin Liew discussed the latest NODX figures in Singapore for May and his outlook for economic growth.

“Singapore’s non-oil domestic exports (NODX) deteriorated more significantly than expected, further darkening the 2Q economic outlook. NODX plunged by 14.7% y/y in May from -9.8% y/y in April, much worse than the Bloomberg median estimate of -7.9% and our less bearish forecast of -5.7%. This was the 8th straight month of contraction after 22 months of unabated expansion”.

“The sharper downturn in NODX, with the broad-based weakness in both electronics and non-electronics performance, continued to weigh negatively on manufacturing demand for Singapore. The more negative prints on NODX declines to major export destinations in the region continued to affirm our cautious outlook, and we maintain our call to expect sustained weakness in global demand and that we remain in an electronics downcycle,” he added.

“The export outlook remains dire… We reiterate that there is a substantial risk Singapore may enter a technical recession in 1H 2023, largely driven by the weakness in manufacturing”. 

The United States dollar has crumbled into 2023 despite rate hikes, but there is some potential for a low to develop. The conclusion of the debt deal has taken some risk off the table, and investor appetite for Asia has waned after the slower Chinese recovery.

The seven-year-long trading range is one to watch over the coming months and will depend on the economic outlook for both countries. Singapore has dropped one place in the global competitiveness index of 64 economies. Singapore is now ranked fourth, behind Denmark, Ireland, and Switzerland, but still leads Asian economies.

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