A spate of key US data scheduled for the US afternoon session could spark some volatility in the USDSGD and weaken the Singapore dollar to fresh 2014 lows against its US counterpart.
The headline data is the Institute of Supply Management’s (ISM) monthly manufacturing PMI data, forecast at 54.0, a slight gain on the previous figure of 53.2. Second on the bill, and released parallel to the aforementioned, is the ISM manufacturing employment figure. Consensus puts this figure at 52.8, versus a previous release of 52.3.
Recent concerns over the pace of US growth will draw attention to both releases, and a miss on either would likely test the boundaries of the falling wedge pattern that has been forming since Friday open.
Chicago PMI data disappointed yesterday, and a dovish tone in Fed Chair Janet Yellen’s speech compounded the disappointment to weaken the US dollar somewhat. The corresponding reaction in the USDSGD saw price dip from falling wedge intraday resistance at 1.2614 to wedge support at 1.2571. A correction heading into today’s releases once again saw resistance tested, and price now sits mid-range at 1.2591.
A downside miss, i.e. a manufacturing PMI figure less than 54.0 and a manufacturing employment figure less than 53.2, would compound investor concerns of a delayed interest rate rise, and exert downside pressure on the USDSGD towards wedge resistance at 1.2567. A considerable miss could see the pair break out of the range, offering up an initial target of December resistance at 1.2555. A close below this level would validate fresh yearly lows at 1.2544 as a downside intraday target.
Better than expected data, i.e. a manufacturing PMI figure above 54.0 and a manufacturing employment figure above 53.2, would likely initiate a retest of wedge resistance, an USDSGD break above which could initiate a medium term reversal. Look for an initial target at 1.2629, and beyond that. 1.2644.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com