DOLLAR-SING: USDSGD is pushing higher today,.........>

DOLLAR-SING: USDSGD is pushing higher today, currently at 1.3171 and testing

short term resistance. A close above 1.3200 would add to the growing number of

signals that suggest the dollar is making a comeback against Asian FX. 

- With the MAS tightening its currency policy on April 13, shifting to an

appreciatory bias, the SGD should outperform the region, particularly as

inflation pressures remain low. Headline CPI dropped back to 0.2% y/y in March,

and with the SGD real effective exchange rate already relatively cheap compared

with its regional peers, outperformance is likely. 

- However, this is unlikely to prevent SGD weakness against the greenback as the

Fed continues to hike U.S. rates. U.S. monpol is becoming increasingly tight

while U.S. equity market fragility means that global risk aversion may return.

This combination is negative for Asian FX, and the SGD is unlikely to be spared.

- The performance of the Chinese yuan is likely to be crucial to the performance

of the SGD, as any weakness in the former would weigh directly on the latter due

to its importance in the MAS' currency basket.