USD / SGD – December Consumer Prices +4.3% Y/Y
Dec Consumer Prices rose 4.3% versus 1 year ago, higher than the estimated figure of 3.7% and previous figure of 3.6%. M/M prices rose by 0.7%, which is also a worrying pace. USD/SGD went down lower due to traders pricing in an even lesser chance of MAS (Singapore Central Bank) cutting rates due to higher inflation risks.
The selling off came just when prices tried to break away from the Channel. Bulls of USD/SGD would be sore that bullish momentum came to a halt when an acceleration towards 1.23 was about to take place. Currently, price is heading towards bottom channel, though the bullishness in the short-term remains strong, possibly due to “Risk-Off” sentiment during Asian trade which saw Nikkei falling more than 1.5% lower, and USD and Yen strengthening against all other currencies.
From the longer-term perspective, it seems that price is still trading well within the ~150 pip range from 1.218 – 1.234. In the interim, 1.23 looks to be a decent resistance, with 1.225 providing support. Stochastic also suggest a lower likelihood of price breaking 1.235 currently, with readings heading higher towards the Overbought region.
Fundamentally, USD/SGD should not be too heavily influenced by SGD data (as seen by the muted reaction post CPI announcement). It is widely expected that MAS should not be cutting interest rates anytime soon. Hence, any sharp movements in USD/SGD should only be expected via strong USD volatility. With that in mind, keep a lookout on any USD heavy hitters such as Debt-Ceiling issue that could bring sharp rallies or declines to bring USD/SGD out of the current band.
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