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Currency Market Analysis

Aug 31, 2020 | Currency Market Analysis

Global Themes

USDSGD tumbles as “Fed effect” hits greenback

The USDSGD fell sharply on Friday – and other markets gained – thanks to the US Federal Reserve’s shift to a new “average inflation targeting” policy.

The move is expected to keep US interest rates lower for longer than previously anticipated as the Fed tried to push inflation above its 2.0% target.

The US dollar weakened, with the US dollar closing at the lowest level in over two years on Friday, as US market interest rates fell.

Euro, yen gain

The weaker saw the USDSGD fell 0.5%.

The euro also benefited from the weaker US dollar. The EURSGD gained 0.2%.

The JPYSGD jumped from two-month highs.

Economies in focus

The focus this week is on major economic data with Chinese activity data due today, Australian GDP numbers on Wednesday and the US non-farm payrolls released on Friday.

Chinese PMI is in focus with the government’s manufacturing and services activity numbers released at 9.00am.

The US economy is in focus with ADP jobs due on Wednesday ahead of Friday’s non-farm employment report.

US Federal Reserve commentary will also be key as officials outlines details of the Fed’s policy switch.

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