USD/SGD: Singapore dollar in a holding pattern ahead of FOMC

The USD/SGD is in a tight range after the mixed Singapore trade data and ahead of the Fed interest rate decision. It is trading at 1.3460, which is 0.55% above last week’s low of 1.3390.

USD/SGD price action

Singapore exports rise

Singapore’s economy has weathered the pandemic better than most emerging market economies. Its close proximity to China and the overall demand for its goods have helped to support the economy.

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In a report today, the Ministry of Finance said that the overall non-oil exports (NODX) rose by 8.8% in February after rising by 6.9% in the previous month. This was better than the median estimate of a 1.1% contraction. On an annualised basis, exports increased by 4.2% from 12.7% in the previous month. 

This growth was mostly because of electronics shipments, which rose by 7.4% YoY. This increase was offset by a 33% decline in pharmaceuticals. As a result, the country’s trade surplus declined from S$5.6 billion to S$4.98 billion.

The USD/SGD is also wavering ahead of the upcoming Fed rate decision that will come later today. Analysts at most forex brokers expect the bank to leave interest rates between 0.0% and 0.25%. They will also commit to continue the asset purchase program. 

Some of the things to watch in the statement and press conference are about the bank’s GDP and inflation forecast. Analysts will also watch the Fed’s reaction to the recent rally of yield curves and the dot plot. The plot is an image that predicts where interest rates will be in the near term.

The Singapore dollar has been in the defensive against the USD this year. It has already dropped by more than 2% from its lowest level in February this year. This trend has happened because of the relatively strong dollar and the overall shift from a risk-on to risk-off sentiment.

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USD/SGD technical forecast

USD/SGD chart

The USD/SGD price is trading at 1.3462, which is slightly above the highest point this year. The price is also slightly above the important support at 1.3390, which is the highest point on February 5 and the lowest level on March 12. Also, this price is slightly above the 25-day and 15-day exponential moving averages. Therefore, the pair will likely resume the upward trend as traders target the YTD high of 1.3530.

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