USDSGD near term and medium term outlook

We have been asked by clients to comment on the USDSGD near-term prospects and also medium-term outlook.

While all of us acknowledge that Singapore is going to go through a very difficult recession in 2009 along with the rest of the world. It is clear that from a fundamental point of view the SGD will stay weak relative to the USD for 2009. Coupled with the fact that the United States is still experiencing significant inflows from repatriation, we would see SGD under pressure as the United States is a significant trading partner of Singapore.

Notwithstanding, there is always still opportunity to trade in USDSGD from the charting perspective. Let’s have a look shall we? The daily chart above shows that in the near term the SGD may strengthen against the USD as the stochastic curve has turned downwards with the upper curve cutting the from the top and downwards.



The Bollinger curve which is the two curve embracing the price line has hit the upper Bollinger curve once and did not push through and it’s starting to move downwards. The overall Bollinger curve shows a narrowing which indicates a possible breakout in the near future.

The trailing uppercut and lowercut lines have intersected slightly ahead which also indicates a potential breakout.

We believe within the next one to two weeks, USDSGD will strengthen below 1.50 and move towards 1.49. In other words, a possible 100bps move.

The weekly chart shows a different story. The medium term outlook for the USDSGD is to move up towards 1.55.



The stochastic curve still indicates some strength in the USDSGD for the medium term. Moving averages indicate a stronger USD especially the 50 days and 100 days moving averages.

The uppercut and lowercut lines show a possible breakout in the medium term. In other words, USD will continue to strengthen against the SGD in the next 3 months to 6 months, however, thereafter, when the breakout happens………..who knows where it will go.

It will depend on how the economic situations of both Singapore and United States unfold in Q1 and Q2 before we can make a definitive call as to where USDSGD will move after the breakout.