The USD/SGD pair rallied to the highest level since November 4th as the US dollar dominance continued. The pair is trading at 1.3658, which is about 4% above the lowest level this year.
Singapore economic recovery
The USD/SGD pair has rallied even after the relatively strong Singapore economic recovery. In the past few weeks, data from Singapore has painted a picture of an economy that is firing on all cylinders. This trend has been helped by the relatively strong local and international demand.
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On Wednesday, data by the Singapore Statistics Authority showed that the country’s economy expanded by 5.2% in the second quarter. This was a better performance than the previous growth of 3.4%. On a year-on-year basis, the country’s economy expanded by 7.1%. This growth happened as external and internal demand rose.
Other numbers from Singapore have been relatively strong. For example, inflation has jumped helped by higher crude oil prices. The headline inflation jumped by 3.2% on a year-on-year basis. Excluding accommodation, inflation rose by 3.5%.
The country’s retail sales and manufacturing production have also done well in the past few months. As a result, this strength has helped the Monetary Authority of Singapore (MAS) to start tightening conditions.
The USD/SGD pair has rallied mostly because of the US dollar. The dollar rebound continued today as investors reflected on the hawkish FOMC minutes and the strong US data.
Numbers published on Wednesday showed that the country’s initial jobless claims dropped to the lowest level in more than 50 years. Personal incomes and expenses rose even as inflation remains at the highest level since 1990. Therefore, the Federal Reserve will likely move quicker than expected.
The daily chart shows that the USD/SGD pair has been in a strong bullish trend in the past few weeks. The pair has risen by about 4% this year. As a result, it is above the 25-day moving average.
At the same time, the pair is at an important resistance level where it has struggled to move above it several times before. Therefore, a bullish breakout may be imminent. If it happens, the next key level to watch will be the 50% Fibonacci retracement point at 1.3900.
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