Familiar Levels In Play

Singapore dollar spent the session treading water on Tuesday, and is within its range in early trade on Wednesday. Familiar technical levels are in play, resistance is seen at last week's high of 1.3495, beyond which is the 2021 high at 1.3531. Support is seen at 1.3444, a 23.6% retracement level, while strong support is seen at 1.3391, a 38.2% retracement level that has held since early March.

• Fig.1: USD/SGD

Source: MNI/Bloomberg

• SGD could be supported by higher domestic yields, the benchmark 10-year yield is over 90bps higher since the start of 2021.
• Maybank says it expects the MAS to be on hold at its upcoming April meeting, but notes inflation risks due to strong demand for chips and electronics: "Manufacturing will likely stay healthy in the first half of the year, driven by strong demand for chips and the recovery in chemicals and general manufacturing from their low base last year, especially in 2Q. The pace will likely moderate in the second half given tighter supply capacity limits and the high base effect for electronics. We expect the MAS to maintain its zero or neutral appreciation bias at the upcoming meeting in April given that the economic recovery remains sluggish, despite the inflation risks. We are ascribing a 30% probability of a MAS tightening policy shift at the October meeting, given the risks of an inflation overshoot."
• The transport ministry has outlined some of the steps that Singapore is taking towards establishing a travel corridor without needing to quarantine. However, the arrangements are still some way off as details regarding vaccination certificates need to be finalised. In another positive, scientists from Singapore have developed a rapid testing method that detects variants in the virus, results are available in 30 mins.