USD/SGD rebounded as markets continue to trade 2-way, caught between the forces of heightened geopolitical tensions and policy uncertainties associated with Trump presidency. Swings in RMB, JPY continued to drive USDSGD in the near term. Pair was last seen at 1.3472, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Technical patterns suggest signs of bearish pullback
“Daily momentum is mild bullish, but RSI continues to show some signs of turning lower. Bearish divergence on MACD appears to be playing out. Technical patterns suggest signs of bearish pullback in the near term. Support at 1.3340 (200 DMA), 1.3290 (61.8% fibo retracement of Jun high to Oct low). Resistance at 1.3490, 1.3520 levels.”
“MTI revised 2024 growth forecast higher to around 3.5%, up from 2 – 3% previously. For 2025, MTI looks for growth at 1 – 3%. MTI expects growth in Spore’s key trading partners to ease slightly from 2024 levels, especially for the US and China, and flagged that global economic uncertainties have risen, including uncertainty over the policies of the incoming US administration, with the risks tilted to the downside.”
“The downside risks cited included 1/ a further escalation of geopolitical risks (including in the Middle East as well as trade tensions among major economies could lead to higher prices and production costs, as well as greater policy uncertainty, which in turn could weigh on global investment, trade and growth, and 2/ disruptions to the global disinflation process could prompt tighter financial conditions for longer and the desynchronisation of monetary policies could trigger latent vulnerabilities in financial systems.”
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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