Forex Investment and Currency Trading

SGD: MAS more aggressive than expected
 
The key event overnight was a surprise tightening of policy by the MAS, through a re-centering of the SGD NEER to the prevailing level, representing an effective 1% upward revaluation.
  
Today, the MAS re-centred the SGD NEER to the prevailing level and changed its stance to one of “modest and gradual appreciation”. The central bank will target 2% appreciation in the SGD NEER. A contributing factor to the MAS decision was the strong Q1 GDP print - the economy grew at a 32% annualised rate - but the government also issued a more optimistic appraisal of global [...]

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The euro remains under pressure after Wednesday’s attempt to rebound was quickly reversed. The latest German data (weak reading of the factor orders data with a -2.3% m/m print for November) is added to the negative outlook. Also the German government has suggested that it is assuming the ECB will keep interest rates at the record low of 1% through to 2013 (market expects a cautious approach from the ECB at today’s meeting). Market now expects EURUSD to test the major medium term support in the 1.3730/10 area.
The broader picture for the euro also remains bearish with the EC endorsement of [...]

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The markets still appear a little groggy after the holiday break and unsure of what to do with the major currencies – yesterday was a “risk on” sort of day on the basis of higher commodity prices and (mainly) higher global equities but the USD did relatively well, the JPY rebounded and the EUR turned in a rather middling performance – not exactly risk on sort of trends. The only thing that seemed to “fit” was a modest outperformance by the commodity bloc. It is notable that the inverse correlation between the USD and equities, which had shown signs of [...]

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The New Year has seen the USD revert to its old ways to some extent; the late year gains in the USD were temporary in nature, and while the slide in EUR/USD extended further than expected, some still do not think the late year rebound in the USD represented a significant turning point. While long term rates in the US have been rising, shorter term rates remain very low; it has been noted before that very steep yield curves are not usually USD-supportive and the exceptionally low levels of short term rates remain a significant restraint on the USD – [...]

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