Singapore Dollar Strengthens After Bullish GDP Forecasts

This month, the US dollar has gained significantly against the Singapore dollar. The USD/SGD has risen from 1.3627 to a high of 1.3753. This is an almost 1% increase. This year, the dollar has gained by more than 2% against the Singapore dollar. The weakness in the latter is attributed to the ongoing political uncertainties in the country and because of a stronger USD.

In overnight trading, the SGD gained slightly against the USD after a government report said that the economy will expand by 3.3% this year. This was a slight increase from the previous estimate of 3.2%. This data was released by the Monetary Authority of Singapore (MAS), which performed a survey of private-sector economists. In the third quarter, the economy expanded by 2.2%, which was better than the 2.1% in the same period a year ago.

This growth will come from the finance and insurance sector which is expected to increase by 6.9%, which will be higher than the previous prediction of 6.7%. The laggards will be the manufacturing sector, which is expected to grow by 7.4%, down from the previous estimate of 7.6%. The construction sector is expected to contract by 3.5%.

In addition to the GDP numbers, the survey found that the headline and core inflation will be at 0.5% and 1.7% respectively. The core inflation strips the volatile food and energy prices. The unemployment rate is expected to remain at 2.1%. The biggest risk according to the surveyed economists was the ongoing trade tensions between United States and China.

In the chart below, the 14-day and 28-day EMA are in line with the price of the pair. The RSI has continued to remain along the 47 level. The likely determinant of the pair today will be the inflation numbers from the United States.

(Click on image to enlarge)

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