The US Dollar (USD) extended upside movement against the Singaporean Dollar (SGD) on Wednesday, increasing the price of USD/SGD to 1.2562 ahead of some major economic developments including the US monetary policy which is due today. The sentiment remains bullish due to Higher Low (HL) in the recent downward wave.
USD/SGD is being traded around 1.2562 at 5:00 GMT in Asia. A hurdle may be noted near 1.2578, the intraday high of yesterday, ahead of 1.2647 that is the swing high of the previous wave and then the channel resistance which is currently sitting in near 1.2775. A break and daily closing above the channel resistance will push the pair into renewed bullish momentum, opening doors for a multi-year high above the 1.2900 milestone.
On the downside, the pair is likely to find a support around 1.2547, the intraday low of yesterday, ahead of 1.2448, the swing low of the previous wave and then the trendline support as demonstrated in the above chart. A daily closing below the trendline support will trigger a deeper correction below the 1.2200 handle.
Singapore Unemployment Rate
Today the Statistics Department of Singapore released the unemployment report. Analysts had predicted 1.8% increase in the unemployment during the first quarter but the actual reading came out to be 2.1%, worse than the forecast, which consequently increased bullish momentum in the USD/SGD.
US Monetary Policy
The Federal Reserve is expected to announce another tapering in the monthly bond-purchase program worth $55 billion. Generally speaking, the tapering decision is considered bullish for the pair. Moreover, the US central bank is expected to keep the benchmark interest rate unchanged at the current 0.25% level.
Singapore Manufacturing Activity
On Monday, the Singapore Institute of Purchasing & Materials Management (SIPMM) is due to release the manufacturing report. According to the median projection of different economists, the manufacturing activity in the Asian nation declined slightly to 50.75 points as compared to 50.80 points in the month before, worse than expected actual outcome will be seen as bullish for USD/SGD and vice versa.
The government of Singapore will release the quarterly account balance report next week. According to the average forecast of different economists, the trade surplus jumped to SGD 19.2 billion during the first four months of the current year as compared to SGD 17.36 billion in the same duration of the year before, better than expected reading will be seen as bearish for USD/SGD and vice versa.
Keeping in view the overall fundamental and technical outlook, buying the pair around the channel resistance, placing the stop loss below the trendline, could yield favorable results; the target should be near the long term trendline resistance.
To contact the writer of this story: Usman Ahmed at email@example.com