The USD/SGD currency pair has been experiencing a dynamic shift in trading sentiment this week. As of Tuesday, the pair has moved above the 1.36000 level, testing values last seen on August 17, when it reached a high of 1.36275. This marks a significant rise from last Friday's low, when the pair traded near the 1.34750 mark, a value it had last traversed on August 11.
The USD/SGD is influenced by both Western and Eastern considerations. Singapore, being a crucial financial hub, handles a large volume of transactions with the Chinese yuan, making China's economic conditions an important factor in the trading sentiment and cash holdings of Singapore's banking spheres.
Last Friday saw a momentary flicker of hope for bearish traders as the USD/SGD dipped briefly before surging only a few hours later to touch the 1.35500 ratio. This surge ended the week near high water marks. The USD/SGD also correlated with several major currency pairs which saw the USD strengthen on Friday. However, the move lower early Friday in the USD/SGD did not occur in many other currency pairs, suggesting other factors at play in Singapore.
Yesterday was a holiday in the U.S., leading to globally lower Forex volumes than usual. Despite this, the USD/SGD held onto its short-term value and incrementally climbed early this Tuesday morning.
As U.S financial institutions returned to full operation today after the holiday, smaller traders braced for potentially fast conditions. The nervous sentiment dominating its trading has led some to believe that the USD/SGD is priced rather high once again.
Speculators are advised to exercise caution today as trading volumes increase and return to normal, potentially shifting behavioral sentiment. Those considering selling the USD/SGD and looking for downside are advised to have full risk management in place if they are going to wager on reversals lower taking place.
Looking ahead, this Thursday and Friday could be significant days for the USD/SGD as China's economic data and U.S. Federal Reserve rhetoric collide. The trend upwards over the past month and a half in the USD/SGD has proved challenging.
In terms of short-term outlook for the Singapore Dollar, current resistance stands at 1.36120 with support at 1.35970. High target is set at 1.36250 while low target is at 1.35450.
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