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Currency Market Analysis

May 02, 2018 | Currency Market Analysis

Global Themes

USDSGD hits four-month highs ahead of Fed decision tonight

The USDSGD hit the highest level since 11 January as the US dollar continued to gain ahead of tonight’s meeting of the US Federal Reserve.

The US dollar’s recent gains have seen the closely-watched US dollar index move into positive territory for the year.

US data was mixed overnight but an increase in manufacturing prices caused markets to fret about rising inflation and the potential for the Fed to raises rates at a quicker than anticipated rate.

The Fed is not expected to raise rates tonight, but a hike in June is seen as a near certainty.

Pressure

The stronger US dollar pressured other major currencies.

The EURSGD fell 0.1%. The JPYSGD climbed 0.1% but remains near three-month lows.

The Australian dollar was pressured after yesterday’s Reserve Bank of Australia meeting saw the central bank keep rates on hold for the 21st month in the row. The RBA last cut rates in August 2016.

Fed watch

The US Federal Reserve decision, due at 2.00am, will be closely watched as markets continued to come to terms with the new Fed chair Jerome Powell.

After raising rates at his first meeting, in March, this decision, his second, will be closely scrutinised for any likely future moves.

Otherwise, European GDP and the US ADP jobs number releases means we might see a volatile session overnight.


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