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Currency Market Analysis

Sep 20, 2017 | Currency Market Analysis

Global Themes

USDSGD at lows as US Fed faces “critical” test tonight

The USDSGD slipped back to near two-year lows overnight as markets looked ahead to a critical meeting of the US Federal Reserve.

The Fed’s decision, due at 2.00am, will see the US central bank begin a massive reversal in policy after almost ten years of purchasing US government bonds to keep interest rates low.

Instead, the Fed will now slowly sell back these bonds as it attempts to exit from the largest monetary stimulus program in US history.

US bonds yields drifted lower overnight and saw the greenback weaken.

JPY at lows

The USDSGD saw a small slip lower of 0.1%

Across markets, the euro and the British pound both weaken after a recent run higher. Both the European Central Bank and Bank of England look increasingly likely to soon tighten policy.

The Japanese yen continued to weaken as it fell to the lowest level since April 2016.

Orders

In addition to the Fed’s plans to reverse its quantitative easing program, the market will also be looking to the central bank’s projections for future interest rate hikes.

With the market assigning a 50% chance of an interest rate increase by the end of the year, the Fed’s forecasts could have a massive impact on the USD overnight.

Placing overnight orders is one way of capturing the potential volatility and achieving better FX rates.

Speak to your Western Union Business Solutions representative for more information.


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