After a run higher last week as broad Forex nervousness seeped into the USD/SGD in a correlated manner, the currency pair has crept lower and is traversing the 1.28260 vicinity as of the writing.
Forex markets have been volatile the past week and a half for traders. The USD/SGD has not escaped this nervousness. After touching highs as global investors expressed widespread nervousness last week, the USD/SGD has also incrementally traded lower the past few days holding onto a lower realm and now is producing sideways action as it awaits the next act.
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Drama and the USD/SGD aren’t typical words paired together. The Singapore Dollar has a habit of producing fast momentum in a stable manner. The trading in the USD/SGD doesn’t often produce major surprises, it produces results which are often a fair barometer of financial institutions’ sentiment. The USD/SGD however did produce volatile results last week as a reaction to turmoil in the global markets. Now, the stage is set for the U.S Federal Reserve in a handful of hours.
Fed Chairman Kevin Warsh Taking the Stage
Later today the new Fed Chair Kevin Warsh will discuss the FOMC interest rate decision. Although the CPI report from the U.S came in higher last week, the Fed Chair may argue that the anticipated agreement between Iran and the U.S will lower energy prices in the mid-term and inflation will subside. This opens the door to the consideration the Fed will not increase the Federal Funds Rate today. USD/SGD traders will be monitoring the coming rate announcement from the Fed carefully.
The USD/SGD is now traversing lower realms and is showing signs that financial institutions may believe lower depths can be attained from a speculative viewpoint. Monday’s test of the 1.28010 level may have been a signal that if optimistic sentiment is ruling the day that the USD/SGD can once again challenge this level and perhaps go even lower. A glut of energy supply and tame interest rate policy from the U.S Fed is speculative fuel potentially for the USD/SGD to fall lower.
Betting Scenarios and Thinking About Following the Crowd
While momentum trading may be the wish for many traders, on Fed announcement days it can become a dangerous challenge.
- This because financial institutions have likely bet on their outlooks already in many cases, in other words some of the USD/SGD selling seen since Thursday of last week may have the outlook the Fed will not raise interest rates today.
- Immediate choppy conditions should be expected by traders, including wide spreads.
- That leaves the door open to whipsaw results because some large player may try to cash out profit quickly on short-term bets.
- The Fed Press Conference will cause fireworks later today in the USD/SGD.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.28285
Current Support: 1.28235
High Target: 1.28325
Low Target: 1.28050
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