Singdollar rally continues, at fresh record vs Malaysian ringgit, near 4-mo high vs USD, ahead of Trump speech

The SGD is trading near two-month high versus the Hong Kong dollar too.

Sigapore dollar
Singapore dollar notes Reuters

The Singapore dollar has rallied to multi-month highs against its US and Hong Kong counterparts and reached a fresh record high against the Malaysian ringgit on Tuesday (Feb 28) with markets waiting for an important Trump speech scheduled for later in the day.

USD/SGD slipped to 1.4000 from the previous close of 1.4042, setting a near four month high for the Singapore currency. Against the Hong Kong unit, SGD strengthened to 7.7619, comparable to the levels held late December, and from Monday's close of 7.7614.

The Singdollar continued its upward journey in the uncharted territory against the Malaysian ringgit and fetched a new record of 3.1724, up from the previous close of 3.1608.

Meanwhile, data from Singapore showed that export and import prices accelerated in January.

On year-on-year basis, export prices rose 6.1% in the first month of the year, compared to 3.9% rise in December. Import prices rose 11.3% up from 8.8%.

Another data point showed factory gate inflation quickened in Singapore. Producer prices increased 14.5% in January faster than the 9.1% rise recorded for December.

Trump Factor

The US President is due to address a joint session of Congress later in the day, in which he is likely to speak about the new government's economic policies, especially about tax reforms.

Trump's victory in last year's presidential election stoked risk appetite in the hope that he will increase infrastructure spending and cut corporate taxes.

Such optimism boosted risk appetite worldwide sending several major equity bourses including those from the US to record highs.

That said, investors are largely unsure about what he would actually deliver at the speech.

Those who expect Trump to expand fiscal policy would brace for quickening of inflation and, therefore, higher Fed rates and stronger dollar.

But the dollar was down against the euro and the yen on Tuesday, indicating the market might be now cautious about adding to long dollar positions and rather be waiting for clearer signals from the event.

With little to expect from the European economic calendar on the day, all eyes are on Trump.

USD/SGD Technicals

The pair is now testing support just above a medium term barrier of 1.3950, a break of which can soon open doors to 1.3600. On the way, 1.3900, 1.3800 levels are likely to form a range for some time.

If 1.3600 proves weak, the pair may slip to 1.3400-1.3600 range for some time before getting to 1.3200.

In case of a reversal from current levels, 1.4120 and 1.4200 are the levels to look at immediately. Further north, 1.4400 may be a weak resistance point ahead of a retest of the January high of 1.4547.