The <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Singapore dollar has finished the past 7 days weaker against its US namesake, as the lack of Singaporean data left the currency victim to recent greenback strength. The USDSGD currency pair had risen as much as 0.8 percent above last Wednesdays close before a modest rally left it 44 points below its high. An overall rally in Asian exchange rates leaves the door for further appreciation ahead of upcoming retail sales and exports data.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The next 7 days of trading should see volatility through several key pieces of economic data. Due tomorrow, the US Census Bureau will report on August Retail Sales growth in the American economy. Given the importance of consumer spending to overall economic expansion, traders will closely watch the figure to protect themselves against sharp moves in USD-linked currency pairs. The following day will likewise see the same data for theSingapore retail sector. Expected to produce higher annualized growth than the June result, the report may make a case for allowing the domestic currency to appreciate. This coincides with calculations showing that the SGD remains towards the top of its trade-weighted valuation index. Given that many signs point to an imminent USDSGD drop, the coup de grace may come in the form of Mondays Domestic Export report. Median analyst forecasts call for a 2.1% gain in the trade measure for the month of August?a substantial improvement over Julys result. Signs of a pickup in trade growth should prompt monetary policy tightening in the form of a stronger exchange rate. It will be important to monitor developments at the coming G7 summit, however, as talk of weak Asian currencies could potentially be a contentious issue among diplomats.
The past seven days of currency trading were dominated by the US dollar, and Singaporean forex movements were no exception. Indeed, the USDSGD moved over 130 points above previous lows. With no substantial news out of the small Asian economy to defend the Greenback advance, some claim that it is now near the top of its MAS-mandated trading range. A sharp reversal at the 1.5800 figure certainly supports this notion, but it remains to be seen if upcoming trading will confirm such speculation. We wait for coming economic data to spark moves in the USDSGD while it consolidates below the 9/12 highs.
Technical Outlook Little has changed from last week as the USDSGD has quietly moved higher. The pair has consolidated and formed a triangle since hitting a low on 5/10 at 1.5604. Trendline resistance from 1.6033 has held at todays high at (1.5801). A breakout remains imminent as the Bollinger bands (daily) are tight and price is close to the apex of the aforementioned triangle. USDSGD may be forming a long term bottom. Long term fibo support from the 61.8% of the 1.3900-1.8556 May 1995 to December 2001 bull wave is at 1.5684. The decline from 1.8556 has stalled at this level and monthly RSI is oversold. A break above 1.6033 (June high) would turn conditions confidently bullish.
