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Over the past week, theSingapore dollar has remained under pressure as the G7 meeting produced no rhetoric in favor of Asian currencies, continuing the uptrend buy notion for the counter greenback. However, now formidably testing the 1.5900 handle, Singapore bullishness may very well be in play. The underlying currency rose on the week, finding support at the 1.5750 figure before vaulting higher to the 1.5899 high hit on September 18th. Subsequently, the recent coup in Thailand additionally seems to be adding some downward pressure on the emerging market denomination as traders and FX backers fled for US dollar protection. Key support is likely to come in at the 1.5850 figure before any further declines can be anticipated.
Two key reports that would move a major economys currency are even more likely to boost current speculation of the Singapore dollar. Expected for the week will be the consumer price index for the Asian tiger economy, simultaneously being released with the monthly industrial production figure. Although no consensus exists, the rate of inflationary pressures is likely to keep with the most recent 1.1 percent rate increase seen in the month of July. Correlated with the overall price rise seen throughout Asia, there is plenty of evidence to keep the rate in line and below a benchmark level considered by most major industrialized countries. Subsequently, the monthly figure is estimated to have risen at a higher pace, rising in line with the 0.8 percent seen in July. Industrial production is additionally expected positive, rising at 19.6 percent for the annualized comparison in August. Although enormously positive, the most recent figure was regarded as a small disappointment as it was the first decline in overall production seen in three months. For the record, a string of positive increases in the second quarter offset the decline from the 37 percent high reached in the very beginning of the first quarter. Attributed to the decline looks to be the monthly dip of 2.2 percent seen in July, reversing the 19.5 percent monthly rise the month prior. Nonetheless, both bits of data are expected to support stronger Singapore dollar bullishness, even as the region is somewhat weighed down by Thailands political situation.
Last weeks schedule added to Singapore dollar woes and US dollar strength as retail sales figures purported a different picture than had earlier been estimated. Rising 2.7 percent on the annualized comparison, retail sales was released weaker than expected by the consensus 6.3 percent figure. Although continually positive, the print is considerably lower than the previous months, declining by 52 percent on the month. Sales declined by 3.1 percent on the monthly comparison for July. Global sales demand seems to have additionally tapered off as non-oil domestic exports rose less than expected. Increasing by 2.6 percent, the figure was far lower than the consensus 10 percent, lending to a bearish bias on the underlying. The monthly figure actually declined by 6.4 percent and looks to be attributed to the lackluster 3.9 percent rise in electronic exports, a non-oil component.
Economic Releases for September 19 September 26
Date Event GMT EST Consensus Previous 9/25 Consumer Price Index (YoY)(AUG) 5:00 1:00 -- 1.1% 9/25 Consumer Price Index (MoM)(AUG) 5:00 1:00 -- 0.8% 9/26 Industrial Production (YoY)(AUG) 5:00 1:00 -- 19.6% 9/26 Industrial Production (MoM)(AUG) 5:00 1:00 -- -2.2%
Technical: 3 wave correction of the 1.5652-1.5928 rally took USDSGD to the 1.5800 figure today. The first corrective wave (1.5928-1.5845) is almost exactly equal to the 3rd corrective wave (1.5878-1.5800), which suggests that the correction is over and that higher prices are ahead. Hourly RSI is increasing from below 30, which improves the probability of a turn higher. If support at 1.5800 fails, then price probes the 50% fibo of 1.5652-1.5928 at 1.5790 and the 61.8% fibo at 1.5758. A rally above the 9/20 low at 1.5845 would improve the bullish outlook.
