Cautious buying has been demonstrated within the USD/SGD exchange rate for a handful of days leading up to the U.S Consumer Price Index results which will be published in a handful of hours. Having touched a low of nearly 1.32400 last Wednesday, the USD/SGD has seen an incremental climb higher in the wake of lighter than normal Forex volumes as the Easter holiday has been celebrated in many places. However, the USD/SGD as of this morning while trading near the 1.33225 ratio is still within the middle of its three month chart technically. Full volume is also now back following the holidays.
Day traders may wonder why I am mentioning a three month insight just before the U.S CPI numbers will be released today. The reason why is because inflation remains the central theme the U.S Federal Reserve is examining, as they consider their monetary policy and what has been an aggressive interest rate outlook. The USD/SGD is essentially trading near values it traversed in the middle of January and early February, this as financial houses believed the U.S Fed would ‘have to’ become less hawkish regarding their interest rate policy.
Having climbed in a Conservative Manner the USD/SGD is set for a Reaction
While the USD/SGD has produced a slight upwards climb it remains rather firmly within the long-term bearish part of its trading range. The outcome of today’s inflation numbers from the U.S are sure to spark a sudden burst of activity and the rather consolidated price range which has been seen the past week will vanish in a hurry. The ability of the USD/SGD to break out of the 1.32850 to 1.33450 range is likely. Certainly there are no guarantees, but traders must be ready to ride out the volatility, and if you are pursuing a chosen direction it would be wise to have your take profit and stop loss orders working in advance.
- A stronger than anticipated inflation result via the U.S CPI could spur on buying of the USD/SGD today.
- While a rate hike is largely anticipated from the U.S Fed in May, another hike in June remains questionable. Today’s Consumer Price Index results will affect trading outlooks and move the USD/SGD.
- If the inflation numbers are weaker than expected today from the U.S, this could spur on selling of the USD/SGD and support levels may prove vulnerable with force.
Volatility will hit the USD/SGD and the Price Range will take a Hit
The past week of rather calm trading in the USD/SGD will vanish quickly today. Full trading volumes will flourish as financial houses react to the inflation numbers. Traders wagering on the USD/SGD before the CPI results are published will be playing with fire if they are not adequately prepared with solid risk taking tools.
As for a prediction regarding inflation numbers I personally have no idea. Although I have found it interesting that the USD/SGD has crept higher in the past week, which may mean some financial houses have likely positioned their holdings for U.S inflation to remain stubborn and the U.S Fed to remain vigilant. One thing that is sure is that the conservative and rather tight range of the USD/SGD will disappear in the coming hours.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.33310
Current Support: 1.33110
High Target: 1.33790
Low Target: 1.32470
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