Forex Investment and Currency Trading

Today the Monetary Authority of Singapore (MAS) announced a modest monetary tightening. In the twice yearly monetary policy statement (MPS) it maintained its FX stance of a “modest and gradual appreciation” of the Singapore dollar (SGD) nominal effective exchange rate (NEER) which had been “increased slightly” in the previous policy statement announcement in Oct-071. Also importantly, due to rising inflation risks, the central bank opted for a one-off re-centring of the SGD NEER policy band at the current level of the SGD NEER. The last time there was a re-centring was back in July-03, with the mid-point set at the [...]

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USD
Event risk: Mixed messages from the chain-store data but broad recessionary conditions and 4 consecutive falls in retail jobs suggest downside risk to consensus calling for a 0.2% rise in core retail sales (Mon). The ECRI leading index hints at still more potential downside for the Empire survey (Tue) and Philly (Thur). A 7%+ fall in Feb permits warns March housing starts (Wed) could fall sharply too. The Fed’s Beige Book (Wed) is likely to be peppered with anecdotes of yet more slowing in activity while the core CPI (Wed) should bounce back from an aberrant flat outturn to [...]

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Singapore will be releasing the advance GDP estimates for Q1-08 and the semi-annual monetary policy statement on 10th April 2008. Even though a technical recession is not expected, the slower growth momentum in certain sectors is likely to see GDP growth moderate. Singapore’s January CPI inflation came in much higher than expected, the highest in nearly 3 decades. While inflation did moderate slightly in February, food and oil related increases still remain significant. However importantly, domestic sources of inflation are also clearly present and these domestic sources cannot be adequately addressed by a strong Singapore dollar (SGD).The Monetary Authority of [...]

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Although there has been a marked deceleration in exports and the trade weighted NEER is trading on the strong side of the fluctuation band, market remains confident about further SGD appreciation and forecast end-2008 USD/SGD at 1.35.
Export growth is weak and broadbased, encompassing both the electronics and pharmaceuticals sector. Electronics exports were weak through most of 2007 and the incremental drain is largely due to the poor performance of the pharmaceuticals sector. This is not a business cycle phenomenon; the decline is more due to changes in product mix.
Accordingly, one cannot attribute the poor export performance to currency strength and [...]

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